From April 13-19, home-buying demand was down 19% after dropping 34% in early April
According to recent Redfin’s report, home-buying demand shook off more than 5 million new claims for unemployment assistance and continued to strengthen. Redfin introduced a new measure for home-buying demand that compares the daily number of homebuyer inquiries to the average daily number of inquiries in January and February, on a seasonally adjusted basis.
For the seven days ended on Sunday, April 19, home-buying demand was down 19% on a seasonally-adjusted basis from pre-coronavirus levels after dropping as much as 34% at the beginning of April.
Not Enough New Homes For Sale
Due to the pandemic, many sellers continue to sit on the sidelines, if they can afford to wait. In a recent survey of 216 prospective sellers, 1 in 5 though it was a good time to sell, down from 1 in 2 ar the beginning of March. New listings for the seven days ended April 17 are down almost 50% compared to the same time last year, far more than the 19% decline in buyer demand.
The lack of inventory is one of the leading causes of a lack of sales. Pending sales for the same period are down almost 50% compared to the same time last year.
Demand for Affordable Single-Family Homes Drives Bidding Wars Again
Even Redfin buyer being the only bidder or facing competition from one or two other offers, Redfin is hearing stories of bidding wars with four, five, or more buyers and homes selling above the asking price across the country. The stories translate eerily similar; well-priced single-family homes have buyers with a stable income and strong credit fighting over scarce inventory.
It becomes difficult to sell a condominium, with pending sales down 56% for the seven days ended April 18. That’s 10 points worse than the 46% drop in pending sales for single-family homes over the same period.
Low Inventory and Buyer Demand Anchors Prices
With inventory down so much, prices have been remarkably resilient. Median listing prices for the seven days ending April 19 were $307,000, up 3% compared to the same time last year. That gain is inflated due to the Easter holiday timing in 2019, but people are surprised when Redfin tells them prices aren’t down double-digits.
Layching Quek, a Redfin agent in Chicago, says “I’ve written some offers 5 to 10% below the list price. Buyers want to know how aggressive we can go, but prices have remained steady. Sellers are just taking properties off the market and waiting to see if stay-at-home is lifted.”
Tighter Lending Standards Will Hit First-Time and Lower-Income Buyers Hardest
Rates for 30-year fixed-rate mortgages have continued to hover just under 3.5% for the past seven days, near all-time lows. Increased lending standards and concerns over job security, will limit oppo unities for first-time and lower-income buyers. This threatens to deepen the divide between folks who can take advantage of historically low-interest rates and those who can’t save up a 20% down payment or haven’t established their credit.
But where there’s a will, there’s a way. Redfin has heard stories of multi-generational buyers, with families banding together to buy a home. Iyesha Chestnut, a Redfin agent in Atlanta, said “she now has several clients looking for larger homes with a finished basement or a proper in-law suite for the parents. In many cases, parents have saved up the down payment but aren’t working any longer, and the kids provide the income for monthly payments.”