The number of properties on the market for 30 days or more increased by as much as 60% in certain locations, with a 12.5 percent increase in July compared to previous year, as analysts predict the US is moving to a buyer’s market.
According to a recent Redfin research, around 61.2 percent of houses listed for sale remained on the market for at least 30 days, up from 54.4 percent in July 2021. The big cities with the most properties remaining on the market compared to last year were Oakland (60.7 percent), Phoenix (54.4 percent), and Austin (50.9 percent), with Fort Lauderdale, Florida, the only city seeing a dip (0.9 percent).
According to Redfin experts, the properties were remaining on the market longer owing to the housing market’s reaction to rising mortgage rates and federal interest rates, which caused purchasers to slow down and reconsider their options.
‘Buyers may take their time making thoughtful selections about properties without having to worry as much about bidding wars, offering above the asking price, and waiving stipulations,’ noted Redfin Deputy Chief Economist Taylor Marr in the research.
‘It’s a different story for sellers, who have spent the previous two years hearing about their neighbors’ houses receiving numerous offers on the day they go on the market. To grab buyers’ attention, they need to price lower and return to the fundamentals of selling a property, such as staging and freshening up paintwork.’
The change follows the Federal Reserve’s significant interest rate rises since May, with the market still to completely respond to the last boost at the end of July, as the central bank indicates further increases are likely this year to battle inflation. Since the start of the pandemic, July 2022 represents the first year-over-year rise in’stale’ housing supply, with Redfin defining stale as properties that have been on the market for at least 30 days without coming into contract.
It’s also the second-largest gain in a decade, after only a 13.9 percent spike in April 2020, when the housing market stalled due to COVID.
Redfin also discovered that the number of properties for sale for more than two weeks and more than two months was up over previous year, increasing by 7.6 percent and 6.8 percent, respectively.
The stagnant housing supply follows a year that favored sellers, with heavy competition and properties flying off the market. According to Redfin, the average house went under contract in July 2021 in only 15 days.
The rush to acquire a house was fueled in large part by cheap mortgage rates and the Federal Reserve’s decision to cut interest rates to near zero during the epidemic.
According to the Mortgage Bankers Association, the average 30-year fixed rate mortgage was just 3.3 percent in the first full week of 2022.
These circumstances have now shifted, with the Fed raising interest rates by near-record percentage points to battle high inflation, which reached 9.1 percent in July.
Mortgage rates grew in tandem with interest rates, reaching over 6% in July before settling at about 5% in August 4.
Christopher Johns, a Redfin real estate agent in Houston, Texas, said the market had completely recovered.
‘From early April to late spring, the market took a 180-degree swing, with purchasers bailing out due to high mortgage rates,’ he added.
‘A number of sellers have told me that they believe they lost out on the hot market.’ Stale inventory has increased the most in Oakland, California, where the number of properties for sale that have been on the market for 30 days or longer has increased by 60.7 percent over last year.
Stale inventory in Phoenix has increased by 54.4 percent since 2021, while it has increased by 50.9 percent in Austin.
Anaheim, California, had 49.7 percent; Riverside, California, had 46.7 percent; Fort Worth, Texas, had 43.4 percent; Dallas had 42.9 percent, Washington, D.C. had 42.5 percent, Sacramento, California, had 41.7 percent, and Seattle had 41.3 percent.
Fort Lauderdale, Florida, was the only large U.S. city to have a drop in stale inventories, with a roughly 1% decrease.
According to experts, the increase in stale inventories is expected to level out shortly and return to pre-pandemic levels.
‘I’m telling potential sellers that we’re not in a housing-market disaster; it’s a correction,’ Johns said.
‘Even if sellers market their property for somewhat less than they would have five months ago, they are sure to get a strong offer.
And my counsel to purchasers is to remember that 5 percent interest rates aren’t the end of the world; they can always refinance if rates fall in the future.’ The change to a buyer’s market is projected to lower house prices throughout the country, with Redfin and Zillow predicting that the reduction would be felt more acutely in hot regions.
If the United States enters a recession, Redfin expects that Riverside’s home market would cool further.
Boise, Idaho is ranked second, followed by Cape Coral, Florida, North Port, Florida, Las Vegas, Sacramento, Bakersfield, California, Phoenix, Tampa, Florida, and Tucson, Arizona.
According to a recent Zillow survey, competition is fierce in hot areas such as San Jose, San Francisco, Seattle, and San Diego, which are all among California’s top five most expensive cities.
Price cuts are most prevalent in Salt Lake City (24.1 percent), Sacramento (21.7 percent), and Phoenix (20.4%).
In June, national house price appreciation slowed for the third month in a row. According to Zillow, this is due to ‘affordability challenges.’
According to Zillow, the majority of sellers were selling houses in the South, which accounted for 39 percent of the market, with the Midwest coming in second at 23 percent and the West coming in third at 22 percent.
Sellers in the Northeast accounted for just 15% of the market.