There’s Far Less Competition for Homebuyers Now

Not since May 2020 has competition been this weak for home buying, according to a new report from real estate brokerage Redfin.

Less than half of home offers written by Redfin agents faced competition on a seasonally adjusted basis in June. The 49.9% rate marked the first time that metric fell under 50% since May 2020 when COVID-19 brought the home market to a near standstill.

It also marked the fifth month in a row that percentage had fallen. It was 65% one year earlier and 57.3% in May.

Nationwide, 49.9% of home offers written by Redfin agents faced competition on a seasonally adjusted basis in June, according to a new report from real estate brokerage Redfin.

Assessing the ‘Cool Down’

“The reality is the market has already shifted, with prices and competition in all but median price points seeing a significant cooling,” David Brooke, owner, The Brooke Group Real Estate at EXP, tells GlobeSt.com. 

“We’re seeing more limited competition with reduced showings and offers on properties across all of the regions we serve—including CT, MA, RI, and FL—to the tune of a 50% decrease.

“This lack of competition is particularly evident in market outliers, like the luxury space. There is no question that interest rates and the cost of financing are drastically impacting homebuyer competition,” he continues. 

Since the most recent Federal Reserve meeting, Brooke notes, “we’ve seen millennial buyers and relocations from higher cost states continue to drive the buyer pool. With this market shift, we anticipate a buyer and seller focus in coming months on the strategic reduction of financing costs, like interest rate buy-downs.”

Consumers Focused on Travel, Not Homebuying

Charles Constant, founder and broker in charge of Robertson Howland Properties in Charleston, S.C., tells GlobeSt.com that this is the first summer that buyers and investors “seem to be enjoying the freedom to travel and putting the home buying process on hold. We expect a strong fall season as the search for primary or secondary vacation homes resumes.”

Constant said that although the Charleston market remains “very strong, buyers are more patient for the right property and at the right price. We have seen a slowing of multiple offers or a call for offer situations.

One Redfin real estate agent commented: “I had one seller take his home off the market because it only got one showing. He decided to rent it out instead. He’s moving to Mexico and thought, ‘Why not let it sit and keep appreciating/?’”

Homebuyer competition fell the most in Riverside, Calif.; Raleigh; and Charlotte.

Home Buying Costs Soaring, Contracts Canceled

Redfin’s report said higher mortgages, interest rates, home prices, inflation and a weakening stock market has “eroded homebuyer budgets, causing some house hunters to drop out of the market.”

In June, 14.9% of home-purchase agreements under contract were canceled. The typical monthly mortgage payment for a homebuyer is now $2,387 at the current 5.51% mortgage rate, up 44% from a year ago.