Home listings indicate a strong buyer’s market. There is a pitfall

This is the strongest buyer’s market in housing in more than a decade.

That’s the headline of a new report from the Redfin-owned real estate brokerage. rocket costume. The report points to specific data regarding the supply of homes for sale and the number of buyers actively searching.

According to Redfin, there were an estimated 36.8% more sellers than buyers in October. This is the largest difference on record since 2013. Redfin defines a buyer’s market as one where there are at least 10% more sellers than buyers. Economists at the brokerage firm estimate that the last time there was a strong buyer’s market was in the years following the 2008 financial crisis, when home prices plummeted across the country.

“Of course, it’s only a buyer’s market for those who can afford to buy. Many Americans are being priced out of the housing market as affordability is eroded,” Redfin researchers noted.

And that’s the crux of the matter. Is it really a buyer’s market if so many buyers are still bidding and therefore not even looking?

Real estate companies say housing affordability is the biggest challenge for their businesses, according to a new report from the National Association of Realtors. This far outweighs other challenges, including industry costs.

“Real estate companies are at the forefront of the industry, seeing first-hand how housing affordability and local economic conditions are impacting their customers,” said Jessica Lautz, NAR’s deputy chief economist.

According to Kotality, home prices continue to fall, but at least nationally they were still up 1.2% year-on-year in September. Nationwide, prices are about 50% higher than they were just five years ago, before the pandemic.

“Similar to the K-shaped trend in overall consumer spending, driven primarily by high-income earners, potential homebuyers from lower income brackets are also challenged by an uncertain job market, slowing wage growth, and deteriorating financial conditions. This is leading to weaker demand for housing and downward pressure on prices,” said Thelma Hepp, chief economist at Kotality.

Mortgage rates are down from recent highs but remain roughly double what they were in the early years of the pandemic, when it quickly became a seller’s market.

According to Kotality, the main barrier to buying a home remains cost, with around 75 of the top 100 housing markets still considered overvalued.

In Washington, D.C., which was hit hardest by the recent government shutdown, potential buyers (mainly those not affected by the shutdown) are finding it easier to get a good deal.

“They’re realizing they have leverage and are realizing they can ask for price concessions and repairs,” said Paul Legere, a buyer’s agent with Keller Williams’ Joel Nelson Group, adding, “They feel it may take some time.”

The government shutdown may be over, but consumer sentiment isn’t pointing to a surge in home purchases. The National Association of Home Builders reported in its November sentiment survey that construction sales forecasts for the next six months are down.

“We continue to see weakness on the demand side, with a soft labor market and tight consumer credit conditions contributing to a challenging sales environment,” said NAHB Chief Economist Robert Dietz.