Report: Housing Market Has Started to Recover

 By Kerry Smith

While the phrase “not out of the woods yet” is still used, Redfin economists say the market probably hit its cycle-low trough the second week of Nov. 2022.

SEATTLE – The housing market has begun to recover after hitting a low point in the second week of November, according to a report from Redfin.

The reason for Redfin’s estimation: The number of its customers requesting first tours has improved 17 percentage points from the November trough, and the number of people contacting agents to start the buying process has improved 13 points. Year-to-year, home tours and service requests are down 23% and 27% respectively, but that’s still an improvement from the November when both were down 40%.

Polled Redfin agents report that bidding wars are even back in some markets, including Central Florida, along with Seattle and Richmond, Virginia. Demand is still down from early 2022 highs, but Redfin calls it a “new phase” and says well-priced listings sell quickly.

Homebuyers return

In fall 2022, many buyers saw their dreams disappear when mortgage rates rose about 7%. But as a result of acclimating to 7% rates, recent drops closer to 6% now seem to more buyers like an unexpected opportunity. Some qualified buyers are even managing to score a rate in the high 5-percent range now.

“I’ve seen more homes go under contract this month than in the entire fourth quarter. Listings that were stagnant in November and December are suddenly getting one to two offers,” says San Jose Redfin agent Angela Langone.

Mortgage applications are up 28% compared to early November, and the typical homebuyer’s mortgage payment is down 10% (about $180) since fall.

The rise in demand has even led to bidding wars in selected metros. Eric Auciello, Redfin’s team manager in Tampa, has seen three modest single-family homes priced around $300,000 wind up in bidding wars in central Florida this month, with 16, 17 and 23 competing offers, respectively.

Further south, in Palm Beach, most well-priced homes are getting multiple offers, but competition is nowhere near 2021 levels, according to local Redfin agent Elena Fleck: “Homes in coveted locations with recent upgrades or renovations – those are the homes getting multiple offers.”

© 2023 Florida Realtors®

Golman Sachs Predicts Declines for 4 Cities – None in Florida

By Jeremy Tanner

Goldman Sachs 2023 prediction includes a 2008-type housing crisis, but only in four U.S. cities it considers “overheated”: San Jose, Austin, Phoenix and San Diego.

NEW YORK – Goldman Sachs is predicting dark days in 2023 for some of the pandemic’s red-hot U.S. housing markets. The investment bank shied away from predicting a nationwide crash, but warned that residents in four cities in particular could see plummeting values that echo the 2008 housing collapse, according to a note to clients obtained by the New York Post.

The “overheated” markets mentioned in the note were: San Jose, California; Austin, Texas; Phoenix, Arizona; and San Diego, California.

Goldman now believes that interest rates will remain high longer than expected, and notified clients that the bank is raising its forecast for the 30-year fixed mortgage rate to 6.5% for year-end 2023.

September 2022 marked the first time since the 2008 housing crisis that the average long-term mortgage rate surpassed 6%.

High mortgage rates, combined with soaring home prices, are currently driving some buyers away and contributing to a cooling housing market.

Austin, ranked the hottest real estate market in the U.S. in 2021 by Zillow, has fallen to 30th for 2023. The company’s report called the market “ice cold” and stated that homes are now spending an average of 68 days on the market, more than any other major U.S. metro. The Austin Board of Realtors has pushed back against the report, saying that there is still “incredibly high demand.”

But just how bad could things get in 2023?

Prices are expected to fall less than 2% in cities like New York and Chicago, according to Goldman, and even grow in others, like Baltimore and Miami.

In cities where valuations have drifted far from fundamentals, the decline is expected to be far more devastating, according to the note.

“This [national] decline should be small enough as to avoid broad mortgage credit stress, with a sharp increase in foreclosures nationwide seeming unlikely,” Goldman Sachs wrote. “That said, overheated housing markets in the Southwest and Pacific coast, such as San Jose MSA, Austin MSA, Phoenix MSA, and San Diego MSA will likely grapple with peak-to-trough declines of over 25%, presenting localized risk of higher delinquencies for mortgages originated in 2022 or late 2021.”

National Association of Realtors Chief Economist Lawrence Yun said in his 2023 forecast that he sees “hopeful signs” for the country as a whole and expects housing prices to be flat on average.

“Half of the country may experience small price gains, while the other half may see slight price declines,” Yun said. The exceptions, however, are markets like the San Francisco Bay Area, where San Jose is located, which he predicts will see potential 10-15% drops in 2023.

“Mortgage rates are the lifeblood that drive home sales,” Yun said. The average rate on a 30-year loan was 6.15% this week, nearly a full point below the 7.08% high of September 2022.

The same rate was 3.56% at this time last year, according to Freddie Mac.

© 2023 WKRG, Nexstar Broadcasting, Inc. All rights reserved. 

U.S. Pending Home Sales Rise For First Time In 14 Months

 January 25, 2023 by Dana Anderson and Lily Katz - Redfin News

Pending sales increased 3% in December from the month before, the first monthly gain since October 2021. But sellers remained on the sidelines, with new listings posting their biggest annual drop since the start of the pandemic. 

Seasonally adjusted pending home sales rose 2.9% nationwide in December, the first month-over-month increase since October 2021. Pending sales continued falling year over year, but the decline eased for the first time in 10 months—to 30.9% from a record 35.1% drop in November. 

Closed home sales fell 33% from a year earlier, but that drop also eased from a record 35% decline in November. Still, far fewer homes are selling now than a year ago during the pandemic homebuying frenzy. 

“The small uptick in pending sales suggests some homebuyers returned to the market at the tail end of 2022 after demand plummeted in the fall,” said Redfin Economics Research Lead Chen Zhao. “That’s mostly because slowing inflation has driven mortgage rates down to about 6% from a peak of over 7%, giving buyers some relief and sending the typical buyer’s payment down nearly $200.  Along with the dollar decline in monthly payments, rates traveling down instead of up are helping some sidelined buyers get back into a house-hunting mindset.”

Some Redfin agents in certain areas have noticed homebuyer activity pick up since it stagnated in the fall. In Los Angeles, for instance, local agent Lindsay Katz has seen small bidding wars on fairly priced, move-in ready homes in desirable neighborhoods over the last few weeks, with the stabilization of mortgage rates giving buyers more confidence. But she said the lack of new listings means prospective buyers don’t have many options. 

New listings fell 26.8% year over year in December, the most since the onset of the pandemic, with many homeowners keen to hold onto their low mortgage rates and/or reluctant to sell in a still-slow market. The typical home that sold was on the market for 44 days—nearly twice as long as a year earlier. Data from early January, however, suggests that some homeowners are noticing the uptick in buyer interest and warming up to listing their home for sale.

December Highlights

	December 2022	Month-Over-Month Change	Year-Over-Year Change
Median sale price	$388,100	-1.4%	1.2%
Pending home sales, seasonally adjusted	405,007	2.9%	-30.9%
Homes sold, seasonally adjusted	402,908	-4.4%	-33.3%
New listings, seasonally adjusted	474,257	-3.1%	-26.8%
All homes for sale, seasonally adjusted	1,590,854	1.6%	11.9%
Months of supply	2.3	-0.4	1.3
Median days on market	44	6	19
Share of for-sale homes with a price drop	14.6%	-5.7 ppts	7.2 ppts
Share of homes sold above final list price	23%	-3.4 ppts	-19.9 ppts
Average sale-to-final-list-price ratio	98.1%	-0.4 ppts	-2.4 ppts
Share of home offers written by Redfin agents that faced competition, seasonally adjusted	42%	-1.1 ppts	-25.7 ppts
Pending sales that fell out of contract, as % of overall pending sales	16.5%	0.2 ppts	3.6 ppts
Average 30-year fixed mortgage rate	6.36%	-0.45 ppts	3.26 ppts

Note: Data is subject to revision

Metro-Level Highlights: December 2022

Data in the bullets below came from a list of the 90 U.S. metro areas with populations of at least 750,000, unless otherwise noted. To find the full metro-level and national datasets, head to the monthly section of the Redfin Data Center. Refer to our metrics definition page for explanations of metrics used in this report. Metro-level data is not seasonally adjusted, unless otherwise noted.

• Home sales: In San Jose, pending sales rose 21% month over month on a seasonally adjusted basis—more than any other metro. Next came Anaheim (15.8%), Richmond, VA (15.5%), Albany, NY (13.1%) and Chicago (11.6%). On a year-over-year, unadjusted basis, only one metro saw an increase in pending sales: San Francisco (2.4%). The biggest decliners were Boise, ID (-77.5%), Baton Rouge, LA (-65.5%) and New Orleans (-52.8%).
• Prices: Median sale prices fell from a year earlier in 26 metros, led by San Francisco (-11.4%). Next came San Jose (-7.6%), Memphis, TN (-6.5%), Honolulu (-5.6%) and Detroit (-5.5%). The biggest increases were in Greensboro, NC (15.2%), El Paso, TX (12.9%), Rochester, NY (12.2%), Omaha, NE (10.4%) and Nashville, TN (9.9%).
• Listings: New listings fell the most from a year earlier in Boise (-57.4%), Greensboro (-52.2%), Tacoma, WA (-48.5%), Seattle (-48.2%) and Stockton, CA (-47.5%). They fell the least in McAllen, TX (-3.5%), Detroit (-7.6%), Albany, NY (-11%), North Port, FL (-11.8%) and Rochester (-13.9%).
• Supply: Active listings rose the most from a year earlier in North Port (79.5%), Seattle (59.5%), Nashville (56.5%), Tampa, FL (55.8%) and Fort Worth, TX (48.1%). They fell the most in Greensboro (-28.4%), Milwaukee (-28.4%), Hartford, CT (-28.4%), Bridgeport, CT (-26.3%) and New Haven, CT( -18%).

Scroll down for market-by-market breakdowns on competition and home-purchase cancellations, which aren’t in the Data Center.

 

Competition

Data below came from a list of 34 metros that had a monthly average of at least 50 offers submitted by Redfin agents from March 2021 to March 2022. An offer is considered part of a bidding war if a Redfin agent reported that it received at least one competing bid. The table is ranked from lowest December 2022 competition rate to highest. 

Metro Area	Dec. 2022: Share of Redfin Offers That Faced Competition	Nov. 2022: Share of Redfin Offers That Faced Competition	Dec. 2021: Share of Redfin Offers That Faced Competition
Austin, TX	13.9%	32.1%	57.2%
Orlando, FL	20.0%	8.1%	55.0%
San Antonio, TX	20.0%	33.3%	53.0%
Phoenix, AZ	21.3%	17.8%	48.2%
Miami, FL	21.7%	27.7%	48.6%
Las Vegas, NV	22.7%	24.6%	48.0%
Nashville, TN	22.7%	22.2%	52.6%
Dallas, TX	23.7%	31.7%	65.9%
Raleigh, NC	23.8%	28.6%	63.3%
Seattle, WA	24.2%	25.3%	70.6%
Tampa, FL	26.3%	16.7%	66.7%
Riverside, CA	26.4%	25.0%	46.7%
Portland, OR	26.6%	36.9%	64.4%
Houston, TX	29.6%	22.3%	45.2%
Sacramento, CA	31.7%	45.5%	67.1%
Colorado Springs, CO	35.7%	41.7%	62.9%
Denver, CO	36.0%	29.0%	65.1%
Philadelphia, PA	37.4%	46.9%	59.9%
Honolulu,HI	38.5%	14.3%	72.1%
Chicago, IL	39.9%	38.7%	47.9%
Charlotte, NC	40.0%	31.4%	52.5%
San Francisco, CA	40.4%	50.7%	68.1%
Washington, D.C.	40.5%	44.5%	60.5%
New York, NY	41.0%	57.7%	62.7%
Atlanta, GA	42.3%	41.9%	61.9%
Los Angeles, CA	44.9%	48.4%	72.6%
San Diego, CA	48.1%	43.5%	72.5%
Boston, MA	48.3%	43.9%	68.4%
Detroit, MI	50.0%	32.1%	46.9%
Baltimore, MD	50.9%	48.6%	64.3%
Worcester, MA	52.4%	55.6%	59.4%
San Jose, CA	57.6%	60.5%	75.3%
Minneapolis, MN	57.9%	42.9%	54.2%
Providence, RI	63.2%	62.5%	57.1%
National—U.S.A. (seasonally adjusted)	42%	43.1%	67.7%

Note: Metro-level competition data is not seasonally adjusted.

Home-Purchase Cancellations

Data below came from a list of the 50 most populous metro areas and is ranked from highest percentage of cancellations in December 2022 to lowest. 

Metro Area	Dec. 2022: Pending Sales That Fell Out of Contract, as % of Overall Pending Sales	Nov. 2022: Pending Sales That Fell Out of Contract, as % of Overall Pending Sales	Dec. 2021: Pending Sales That Fell Out of Contract, as % of Overall Pending Sales
Jacksonville, FL	25.6%	25.2%	19.2%
Atlanta, GA	23.4%	23.1%	7.8%
Fort Lauderdale, FL	21.1%	21.4%	20.2%
Tampa, FL	20.7%	22.1%	21.2%
Houston, TX	20.7%	21.0%	19.9%
Cleveland, OH	20.6%	19.2%	20.6%
Fort Worth, TX	20.3%	20.3%	17.4%
Dallas, TX	20.0%	21.9%	17.5%
Riverside, CA	19.6%	19.2%	17.0%
Orlando, FL	19.5%	22.4%	21.4%
Denver, CO	19.3%	18.3%	7.4%
Phoenix, AZ	19.0%	18.7%	17.2%
Chicago, IL	18.8%	17.8%	16.6%
Miami, FL	18.6%	18.3%	15.6%
Las Vegas, NV	18.6%	20.8%	21.4%
West Palm Beach, FL	18.4%	17.6%	18.5%
Detroit, MI	17.9%	16.1%	15.7%
Indianapolis, IN	17.3%	18.8%	16.4%
Pittsburgh, PA	17.2%	17.7%	17.1%
Columbus, OH	17.2%	18.4%	15.8%
Sacramento, CA	17.2%	17.5%	14.2%
St. Louis, MO	17.1%	15.6%	15.6%
Austin, TX	16.1%	17.3%	12.8%
Portland, OR	15.9%	16.8%	14.5%
Nashville, TN	15.9%	16.3%	15.6%
Virginia Beach, VA	15.8%	14.6%	15.3%
Anaheim, CA	15.8%	14.4%	11.9%
Washington, DC	15.4%	13.6%	12.3%
San Antonio, TX	15.0%	12.6%	19.9%
Kansas City, MO	15.0%	17.2%	16.3%
Baltimore, MD	14.9%	13.3%	14.1%
Los Angeles, CA	14.8%	17.7%	13.7%
Cincinnati, OH	14.2%	15.6%	16.1%
Providence, RI	14.1%	12.2%	13.1%
Charlotte, NC	14.0%	14.8%	12.0%
New Brunswick, NJ	13.7%	13.2%	8.9%
San Diego, CA	13.6%	16.5%	13.5%
Philadelphia, PA	13.5%	14.7%	12.0%
Warren, MI	13.2%	13.3%	11.0%
Seattle, WA	12.6%	12.4%	7.8%
Milwaukee, WI	12.1%	11.3%	11.2%
Boston, MA	12.0%	11.8%	10.9%
Oakland, CA	11.7%	8.7%	6.7%
Newark, NJ	11.5%	12.4%	1.7%
Montgomery County, PA	10.9%	9.5%	11.2%
Minneapolis, MN	10.2%	11.9%	10.2%
New York, NY	9.4%	8.4%	5.2%
San Jose, CA	7.5%	8.6%	5.2%
Nassau County, NY	5.7%	7.2%	4.4%
San Francisco, CA	4.1%	6.3%	2.6%
National—U.S.A.	16.5%	16.2%	12.8%

 

 

 

 

Dana Anderson

As a data journalist at Redfin, Dana Anderson writes about the numbers behind real estate trends. Redfin is a full-service real estate brokerage that uses modern technology to make clients smarter and faster. For more information about working with a Redfin real estate agent to buy or sell a home, visit our Why Redfin page.

 Email Dana

Lily Katz

As a data journalist, Lily is passionate about helping readers understand complex facets of the housing market. She is particularly interested in the issues of climate change, race and gender equality and housing affordability. Prior to working at Redfin, Lily spent four years as a reporter at Bloomberg News in New York City.

 Email Lily