Redfin: Housing Demand High, Sight Unseen

Redfin, Seattle, says the spring home buying season is already so tight that many potential home buyers in some markets are bidding on homes before they even see them.

The company’s monthly Housing Demand Index said January started with its highest reading on record, up by 0.5 percent from December to 130.5. From a year ago, traffic rose by nearly 5 percent.

The report said offers increased by 1.2 percent month over month, but slid by nearly 10 percent year over year, in part because of low housing inventories. Redfin said declining inventories resulted in a number of offers made sight unseen; the report said January offers and sales were heavily restrained by a 19.9 percent year-over-year decline in inventory, the largest since at least 2014.

A separate Redfin survey reported 35 percent of people who bought a home last year said they made an offer without first seeing it in person, up from 33 percent in May 2017 and 19 percent in June 2016.

“Inventory has been deteriorating for more than two years, yet 2018 started off with buyer demand stronger than in any previous January we’ve measured,” said Redfin chief economist Nela Richardson. “Along with inventory declines, buyers contended with rising mortgage rates, an overhaul of the tax code and a jumpy stock market. However, strong local labor markets helped keep buyers enthusiastic about homeownership despite headwinds.”

Redfin said 45 percent of Millennials and more than half (57 percent) of respondents who bought a home in Los Angeles last year made an offer sight-unseen. It noted the prevalence of foreign investors in L.A. may have played a role in sight-unseen offers’ popularity there. The market-by-market breakdown below shows that the trend was also driven by buyers in other competitive California metros, with 46 percent in San Diego and 44 percent in San Francisco having done so.

“With mortgage rates and home prices expected to rise and nearly one in five homes already selling above list price in January, buyers contending for a diminishing supply of homes can expect a competitive season ahead,” Richardson said.

The survey took place in November and December, which included responses from 1,503 people who purchased a home in the previous 12 months.