Home Sellers’ Asking Prices Up 13% from Last Year as Demand Keeps Soaring
Redfin, Seattle, said listing prices of homes for sale nationally jumped by 13% to a record-high $328,500 during the four-week period ending July 12.
The report said closed sale prices, which lag listing prices, rose by 6%.
Redfin said home prices are turning in monthly gains at a time of year when prices normally start heading down because people shift their focus from buying and selling homes to vacations and preparing for the start of school. But buyers are coming up to meet sellers’ rising price expectations. Sale-to-list price ratios, which measure how far below the asking price the buyer typically ends up paying for a home, are also climbing, to an average 98.8%, up 0.2 percentage points from the same period in 2019. And for the one-week period ending July 12, the ratio hit a record-high 99%. During the same period, the percent of active listings with a price drop hit a record-low of 34.4%.
The report noted homebuyer activity posted an “unseasonable” mid-summer surge amid the changing conditions of the coronavirus pandemic. The number of home tours taken by North American buyers rose by 12%; the Redfin homebuyer demand index rose by 33%; and pending sales climbed by 7% from a year ago.
“The housing market usually slows down in July and August when people take time off for vacations; this year, though, a lot of vacations have been canceled and buyers who had previously given up their search are being lured back by low mortgage rates,” said Washington, D.C. area Redfin agent Kris Paolini. “The market has stayed hot through the summer and it doesn’t look like we’ll see the typical slowdown in August, either.”
Redfin said this strength continues despite increasing cases of the coronavirus causing some large states, such as California to issue new shutdown orders. In Miami, where coronavirus cases are surging, “not much has changed,” according to local Redfin agent Carlos Mahone. “Since the initial lockdown ended, buyers have been much less fearful and are operating like they did before—including wanting to walk through homes with an agent, often after a video tour.”
Tucson Redfin agent Kristi Penrod noted as more employers embrace remote work, some homebuyers are reconsidering where they want to live; relocations are fueling a hot housing market in relatively affordable places.
“People have realized they can work from home long-term, which has been a boon to Tucson,” Penrod said. “I’m getting four or five calls a week from people in the Bay Area, Seattle, Denver and Virginia, who have realized they can make a downshift in their lives and cash out of those expensive markets. This shift has really helped to create this insane market we’re in right now.”
Redfin said the number of new homes for sale continues to lag behind 2019. For the four-week period ending July 12, 5% fewer new listings hit the market than the same period a year earlier and the total number of homes for sale was down 28%, further exacerbating the imbalance between supply and demand.
With so much competition for so few homes, homebuyers are employing “dramatic measures” to make their offers stand out during bidding wars, the report said. One of the most effective strategies, according to Redfin agents, is to offer free rent back to the sellers, sometimes for months past the date that the sale closes. In a recent survey of about 400 Redfin agents, about one in 10 mentioned that their clients had used this tactic to win a home.
The report can be accessed at https://www.redfin.com/blog/home-sales-and-prices-keep-climbing/.