Strap in, folks! It’s a wild world out there in real estate. Picture this: homes selling for less than the list price at the peak of the housing season. Yes, you read that right. According to the folks at Redfin, this seismic shift might just be the precursor to a buyer’s market takeover. Grab your popcorn, because this rollercoaster isn’t slowing down.
Redfin’s recent data unearthed that typical homes sold during a four-week span in May and June went for 0.3% less than their asking price. Don your reading glasses because the housing experts declare this fact crucial since the market allegedly peaks in late spring and early summer. And in previous years? Homes were flying off the shelves at or above list price. This year, it’s a different story entirely.
Daryl Fairweather, the chief economist at Redfin, tossed some more data our way. Fewer than one-third of homes – only 32% – were sold over list price in the four weeks ending June 23. That’s the sorriest number we’ve seen for late spring since 2020. And now, sellers might just have to swallow the bitter pill that their reign is declining.
We know this might be beautiful music to buyers’ ears, but sellers? Not so much. This twist in the tale might be what some of you prospective homeowners have been fervently hoping for.
Real Estate Today: ‘Buyers Have the Power’
Remember when buying a home felt impossible, like trying to navigate a minefield blindfolded? Ryan Sypek, a broker at Compass Real Estate in Los Angeles, introduces us to a reality where “buyers have the power.” It’s a stark shift from the recent past’s brutal market for buyers.
Prices and mortgage rates shot up like they were Olympians, while new homes became as rare as hen’s teeth. Everyone clung to their old homes like they were the last vestiges in a post-apocalyptic world, thanks to earlier historically low-interest rates. Fairweather himself once proclaimed that homebuyers faced “the least affordable housing market in recent memory.” Oh, those were dark days indeed. But behold, the tide might just be turning.
Redfin reports an 8.2% rise in new listings from a year ago. Houses are now languishing on the market like a third-rate drama series no one wants to watch: 62% of listings in May remained unsold after 30 days, a stark contrast to 50% two years ago. Sellers, it seems the tables have turned.
Sypek paints the pandemic-era picture where he once had 60 offers on a single house. Today he considers himself fortunate to attract four offers. Talk about falling from grace.
Home Sellers’ Delusion: Setting Prices Too High
It appears sellers are living in a fantasy, setting sky-high asking prices, oblivious they’re waltzing into a buyer’s market. Fairweather points out their misguided optimism stems from recent memory: “People are setting prices based on what they saw their neighbors’ homes go for a few months ago.”
Traditionally, sellers aim high, figuring negotiation will bring them what they want. But it seems they didn’t get the memo that it’s a buyer’s playground now. During the pandemic, sellers reveled in bidding wars – a scene reminiscent of gladiator battles. Those days, it seems, may be slipping into history.
Danielle Hale, chief economist at Realtor.com, concurs that the recent years of sellers scoring more than their asking price was an aberration. “That was really an aberration, fueled by high demand and low inventory,” she states.
‘More Affordable Homes’—Words to Dance To
The summer sun seems to have brought with it an uptick in home listings. Realtor.com recorded a 37% rise in listings from June 2023 to June 2024, marking the eighth consecutive month of growth. Could this be the light at the end of the tunnel for buyers? Hale surely thinks so.
Despite a record median sale price of $397,250, proponents maintain that the housing market is showing signs of looseness. The average interest rate for a 30-year fixed mortgage stands at a whopping 7.4%, double from the start of 2022. The typical monthly mortgage payment? A not-so-humble $2,785.
During the pandemic, homes were sold like the last pieces of chocolate cake at a children’s party, often at tens of thousands above asking price. Now, thankfully, sanity restores as inventory rises and buyers have a buffet of options to choose from.
The unusual hot weather might just be another reason summoning buyers’ favor. July’s blistering heat discouraged many from venturing out for house hunting. “I’ve heard some clients say, ‘It’s so hot outside I don’t want to see anything,’” said Joe Hunt, a Redfin manager in Phoenix.
The ‘Lack of Urgency’ Phenomenon
In the maze of smaller local real estate markets, urgency among buyers is at an all-time low. Sypek aptly describes the sentiment: “What I’m hearing everywhere is, there’s just a lack of urgency from buyers right now.”
But don’t pop your confetti just yet, hopeful buyers. In places like Seekonk, Massachusetts, the frenzy persists. Jess Clegg of Next Nest Real Estate reports homes selling between $38,000 to $76,000 over asking price. Philadelphia stories from Michael Maerten at Tri-County Suburban REALTORS tell of sellers reaping 102.7% of asking price in the last 30 days. The guiding light? Pricing appropriately.
If sellers collaborate with their real estate agents to set realistic prices, you’ve got the market figured out. “If you’re pricing your home appropriately,” Clegg said, “then you’re going to sell for over list.”
