Recent data on housing activity indicates that the market is shifting away from seller’s favor, and sellers have been slow to catch on. For buyers, an increase in the number of homes for sale hasn’t been enough to bring them back to the market. According to Redfin Chief Economist Nela Richardson, affordability and financing hurdles are now holding buyers back.
The recent survey by Redfin said that 40% of sellers plan to list their homes above market value even though nationally, “home sales have dropped by 9 percent as compared to last year.”
Additionally, in the last Federal Open Market Committee, Fed Chair Janet Yellen noted that; “existing home sales have fallen almost 10% from their recent highs.”
Richardson stated that it “Typically takes sellers six to nine months to adjust to a price change, but this latest shift is taking longer. Prices have moved down and then up so much over the past five years that it’s difficult for sellers to have a realistic baseline for what their homes are worth in the current market.”
Richardson also commented that; “New buyers in the market are much less willing to chase an escalating sale price or compete with multiple bids. The demand side of real estate is moving from ‘please take my offer’ to ‘take it or leave it as you please.’ Homebuyers’ willingness to walk away from a deal that’s a bad fit is good for them, and is ultimately healthier for the housing market.”
In minutes from the most recent FOMC meeting, Chairman Janet Yellen reported there are still a number of headwinds facing the sluggish recovery in housing:
- A much tighter supply of mortgage credit, particularly for home buyers with low credit scores.
- The slow recovery of the labor market has reduced the pace of new households being formed, leading many adults to become more likely to live with their parents or other relatives.
- The rapid recovery of prices has made housing less affordable for many buyers.