A housing market defined by rapidly rising home prices, bidding wars, a lack of inventory, and sellers with the upper hand in negotiations may be changing. “The signs are pointing to a market that’s shifting toward buyers,” says Danielle Hale, realtor.com®’s chief economist. “But in most places, we’re still a long way from a full reversal.”
After all, home sales aren’t exactly tanking. Prices for existing homes were up 4.6 percent from a year ago in the National Association of REALTORS®’ latest housing report. The median home list price in August was up 7 percent from last year.
While these numbers are still higher than last year, economists point to a slowing growth in the percentage jumps. Last year, median home list prices increased by 10 percent from the previous year and by 9 percent the year before that.
A recent report from real estate brokerage Redfin showed that more than one in four home sellers dropped their asking price last month. The areas seeing some of the biggest decreases this year are Las Vegas; San Jose, Calif.; Seattle; and Atlanta.
“We’ve hit that tipping point in a lot of these cities where what sellers think they can get is just not possible for many buyers,” Daren Blomquist, senior vice president at ATTOM Data Solutions, told realtor.com®. “Now the pendulum is swinging away from sellers and back toward buyers.”
Economists point to housing affordability as a culprit for the slowdown. Mortgage rates are up 0.82 percent since a year ago; the 30-year fixed-rate mortgage averaged 4.65 percent as of Sept. 20. Each percentage point increase in rates can translate to about $143 more on a monthly mortgage payment, or nearly $51,500 over the life of a loan on a $300,000 priced home, according to realtor.com®.
“Home prices have just gone up too fast,” Blomquist says. “It doesn’t mean that all of a sudden it’s a market that’s going to crash. But it does mean there are limits to what people can afford.”
You’d expect bidding wars in major cities such as San Francisco, Boston, and New York—but Akron, Ohio? The Midwestern town has seen the biggest spike in multiple-offer situations on listings in the nation, according to realtor.com®. And as housing demand picks up in the spring, ushering in the typically busy selling season across the nation, other unassuming metros are becoming hotbeds for buyer competition. “Multiple-offer scenarios are no longer reserved for the usual big, fast-moving markets,” says Javier Vivas, director of economic research at realtor.com®. “Demand for homes has spilled outward into secondary, smaller markets, and more buyers are gearing up to face fierce competition in more places around the country.”
Realtor.com® pinpointed the cities that have seen the most acute spikes in bidding wars by looking at the percentage of homes that have sold above their asking prices. The site evaluated listing and sales data from March 2015 to February 2016 and then compared it to data from March 2017 to February 2018. The following seven locales saw the biggest upticks in the percentages of homes selling above asking price:
1. Akron, Ohio
- Share of homes selling above ask: 20.6 percent
- Increase in the share of homes selling above ask: 91.7 percent
2. Worcester, Mass.
- Share of homes selling above ask: 41.5 percent
- Increase in the share of homes selling above ask: 88.1 percent
3. Lexington, Ky.
- Share of homes selling above ask: 22.7 percent
- Increase in the share of homes selling above ask: 86.4 percent
4. Irvine, Calif.
- Share of homes selling above ask: 30.3 percent
- Increase in the share of homes selling above ask: 85.5 percent
5. Greensboro, N.C.
- Share of homes selling above ask: 29 percent
- Increase in the share of homes selling above ask: 81 percent
6. Sioux Falls, S.D.
- Share of homes selling above ask: 32.8 percent
- Increase in the share of homes selling above ask: 74.2 percent
7. Madison, Wis.
- Share of homes selling above ask: 40.9 percent
- Increase in the share of homes selling above ask: 73.4 percent
Source: “Housing Knife Fights! 10 Surprising Cities Where Bidding Wars Are Booming,” realtor.com®
Likely to be a hallmark of this year’s spring homeselling season: Bidding wars. As home listings are scarcer and buyer demand remains high, home shoppers are finding a lot more competition this spring, particularly in hot markets like the San Francisco Bay area, Denver, and Boston.
An improving job market, growing consumer confidence, and the threat of rising mortgage rates have Americans flocking to housing. But many markets remain tight for listings. Housing starts remain well below levels prior to the recession and are geared more toward the higher end of the market. Homeowners also are reluctant to sell their existing home because they’re unsure of where they’d move to with the dearth of listings.
Homes are selling at a rapid clip in places like Denver; Seattle; Oakland, Calif.; Grand Rapids, Mich.; Boise, Idaho; Madison, Wis.; and Omaha, Neb., according to the real estate brokerage Redfin.
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We won’t pretend to know everything that 2017 will bring—heck, 2016 sure surprised us—but we’re pretty certain there will be changes. A lot of them. And while the surprise triumph of Donald Trump in the presidential election won’t alter the fundamentals shaping the 2017 real estate market, its impact is already being felt.
We’ve seen interest rates jump since the election, a movement that’s likely to affect the youngest generation of home buyers.
Just like last year, realtor.com®’s economic data team analyzed our market data and economic indicators to come up with a picture of the key housing trends for 2017. As we prepare to bid farewell to 2016, it looks like we’ll be saying goodbye to the last of the record-low interest rates of the past few years, too. Interest rates have shot up 40 basis points, or 0.4 percentage points, since Trump’s election.
Living near bad schools can decrease a home’s value big time. Indeed, the median home price in ZIP codes with schools that receive a one to three rating (out of possible 10) is only $155,000.
Realtor.com® analyzed home prices and appreciation rates in U.S. ZIP codes to identify possible factors that could drag down prices. Researchers compared the median home price of the ZIP with that facility with the median price for all homes in the same county.
Here are five neighborhood features that had the biggest impact on dragging down nearby home prices.
Renters in some cities may face a long road toward home ownership. Faced with high rents, some may even have to wait a few decades before they’ll be able to save enough for a down payment – that is, if they keep saving at the same rate, finds a new survey by Apartment List.
Certain features near a home — like cemeteries and power plants — could drag down a home’s price. By analyzing home prices and appreciation rates in the 100 largest metro areas with a “drag-me-down facility,” realtor.com® recently identified which could have the biggest impact.
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