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Buyers received concessions—such as money for repairs and mortgage-rate buydowns—in a record 42% of home sales in the fourth quarter, up from 31% a year earlier

Home sellers gave concessions to buyers in 41.9% of home sales in the fourth quarter—the highest share of any three-month period in Redfin’s records, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

That’s up from just over 30% in both the previous quarter and the fourth quarter of 2021, and outpaces the prior 40.8% high from the three months ending July 2020, when the housing market nearly ground to a halt due to the onset of the coronavirus pandemic. Redfin’s concessions records date back to July 2020 and are based on data submitted by Redfin buyers’ agents.

Concessions have made a comeback as rising mortgage rates, inflation and economic uncertainty have dampened homebuying demand, giving the buyers who remain in the market increased negotiating power.

That’s a stark shift from the pandemic homebuying frenzy of late 2020 and 2021, when record-low mortgage rates fueled fierce competition, forcing most buyers to bid over the asking price and waive every contingency just to have their offers taken seriously.

“Buyers are asking sellers for things that were unheard of during the past few years,” said Van Welborn, a Redfin real estate agent in Phoenix. “They’re feeling empowered, partly because their offer is often the only one, and partly because they know sellers have built up so much equity during the pandemic that they can afford to dole out sizable concessions.”

Welborn continued: “I recently helped one of my buyers negotiate a $10,000 credit for a new roof and a handful of other repairs. We originally asked for $15,000, but were happy with $10,000 because the homeowner also agreed to sell for less than their asking price.”

Homeowners are increasingly selling for below their desired price as the housing market slows. A record 22% of home sales recorded by Redfin buyers’ agents in the fourth quarter included both a concession and a final sale price below the listing price, while a record 19% included both a concession and a listing-price cut that occurred while the home was on the market. A record 11% included all three.

Phoenix Saw the Biggest Jump in Concessions

In Phoenix, sellers gave concessions to buyers in 62.9% of home sales in the fourth quarter, up from 33.2% a year earlier. That 29.7-percentage-point increase is the largest among the 25 U.S. metropolitan areas for which data was available. Next came Seattle (25.6 ppts), Las Vegas (22.2 ppts), San Diego (20.7 ppts) and Detroit (20.4 ppts).

Phoenix and Las Vegas are among the fastest cooling markets after they soared in popularity during the pandemic as scores of remote workers moved in, searching for relative affordability and warm weather.

“It took a while, but seller expectations are coming back down to earth. Concessions were common before the pandemic, and we may be returning to that norm,” Welborn said. “Sellers realize they’re not going to get $80,000 over the asking price like their neighbor did last year.”

Welborn said he has recently seen sellers offer credits of as much as $25,000 to cover repairs and closing costs, and that they’re also offering to pay for 2-1 mortgage-rate buydowns and warranties on household appliances.

There were four metros in which concessions were less common compared with a year ago. In Austin, TX, sellers gave concessions to buyers in 33.3% of home sales, down from 38.1% a year earlier (-4.8 ppts). Next came Philadelphia (-2.7 ppts), New York (-2.4 ppts) and Chicago (-1.6 ppts).

Concessions Are Most Common in San Diego

In San Diego, sellers gave concessions to buyers in 73% of home sales in the fourth quarter—the highest share among the metros Redfin analyzed (San Diego also had the highest share a year ago). Next came Phoenix (62.9%), Portland, OR (61.6%), Las Vegas (61.3%) and Denver (58.4%).

In New York, sellers gave concessions to buyers in 13.4% of home sales—the lowest share among the metros Redfin analyzed. It was followed by San Jose, CA (14.4%), Boston (17.5%), Philadelphia (22%) and Austin (33.3%).

To view the full report, including charts, methodology and a metro-level breakdown, please visit: https://www.redfin.com/news/home-seller-concessions-january-2023/

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You have heard the term “entrepreneurship,” and perhaps as a business leader or C-suite executive, you fear the possibility of some of your team members leaving your organization to pursue their own great ideas. This is not because you do not want to see them succeed, but because you may lose them as an asset to your operation. But have you heard the term “intrapreneurship?” Does that sound like a typographical error, or do you have an inkling as to what that may mean for you and your organization?

“Intrapreneurship is a form of organizational innovation that leverages the brilliance of even the most entry-level employees.”

I have long encouraged the high-level leaders and managers at a multitude of businesses and organizations to allocate for innovation hours, where all employees come together with transformative ideas to progress the business or organization further.

But believe it or not, these innovation hours and inclusive efforts can help a business or organization overcome uncertain times, such as a pending recession or even the pandemic we are well on the outside of now. When the unpredictable nature of the world around us has even the most profitable businesses shaking in their boots, I implore you to learn from this blog today how to embrace ideas from all areas to change the course of what you feel is to come!

Uncertain Times Are Not So Uncertain

Let’s begin where all Anticipatory Leaders and Anticipatory Organizations should — Hard Trend future certainties.

Hard Trends will happen, and no matter how high up on the management scale you are, or how powerful the business or organization you own and run is, these future certainties will impact you and your industry, indirectly or directly. During stable economic times, Hard Trends may seem a bit daunting to those that have yet to shift to an Anticipatory mindset. 

In the context of uncertainty, many business leaders feel that Hard Trends and the mastery of these are a positive thing by far! Hard Trends invalidate the very concept of “future uncertainty” by opening even the smallest of windows of certainty in those times. Take a recession for example.

“An economic recession brings every level of individual to the reality of professional, financial, and other uncertainties.”

But if you leverage a looming recession as a Hard Trend future certainty — that a recession is always a possibility — you begin to see a clear path toward finding opportunity. Yes, you read that right, finding opportunity in a recession is possible by accepting that future recessions will happen.

Now there are many ways to prepare for this but looking inward is one of the best answers. After all, you have a valuable team around you specifically and organization-wide that brings their own experience to the table, professional and personal!

Intrapreneurship Saves the Day

Employees having brilliant and innovative ideas that can benefit their team and the organization is the very definition of intrapreneurship.

If we isolate the word “intra” for a moment, it can be compared to my discussions about organizations creating change from the inside out, as opposed to letting disruption and change disrupt you and your team. Entrepreneurship is a disruption to a business or organization in and of itself, as an individual who departs from the company takes their brilliant idea with them and ultimately can create an industry-wide disruption from the outside.

Every employee may have specific tasks assigned to them commensurate with their pay or the number of hours they work. But we tend to forget that each of those individuals are individuals who bring their own life experience, culture, and cognitive processing to your business, organization, or team.

Leverage this! Listen to their experience, their suggestions, and their ideas, no matter how small or seemingly nominal those ideas and suggestions are. A massive Fortune 500 organization does not operate as a single-person entity — even the status quo success of it depends on all levels of employees, so why not let them innovate during uncertain times?

An Anticipatory Organization Is One of Profound Teamwork

There are a few success stories of intrapreneurship and overcoming the uncertainty of the future in the business history books here in the United States and around the world.

One notable instance is with Frito Lay and Flamin’ Hot Cheetos. Now the most successful product from the company, this idea was pioneered during a time of corporate difficulty at the organization by, believe it or not, a janitor making minimum wage!

Frito Lay decided to send out a company-wide note that told all employees to “act like the owner” to help them turn profits around. This note reached janitor Richard Montañez, and he chose to bring his culture and life experience into the situation of turning Frito Lay around. He expressed to the CEO that no snacks appealed to the Latino community, so he had been purchasing their products, taking them home, and adding spices to them.

The CEO and executives of Frito Lay took Mr. Montañez’s suggestion seriously, creating Flamin’ Hot Cheetos from it. Mr. Montañez was not left out of the equation — he has become the VP of Multicultural Sales, amassing a personal fortune and having his legacy cemented in corporate history.

Intrapreneurship is more than just an opportunity for all employees to become a success story like Richard Montañez — it makes clear that teamwork is the answer to overcoming organizational uncertainty. Finally, and most importantly, be sure to incentivize your intrapreneurs, especially if their idea has fully transformed the dynamic of your business, organization, or industry as a whole.

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The supply of homes for sale posted a record year-over-year increase this week as homes linger on the market. But some buyers are making their way back, with Redfin’s Homebuyer Demand Index showing an uptick in early-stage demand.

The total number of homes for sale rose 18% from a year earlier during the four weeks ending December 25, the biggest increase since at least 2015, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

Inventory is up even though new listings are down by double digits because homes are taking a long time to sell amid 6%-plus mortgage rates (the average 30-year rate ticked up to 6.42% this week), economic uncertainty and the typically slow holiday season.

The typical home was on the market for 40 days before going under contract, more than double the record low of 18 days set in May and the slowest pace since January 2021. Just over one-quarter (28%) of homes went under contract within two weeks, the lowest share since January 2020.

Some buyers are dipping their toes back in the market, as they’re able to take their time searching. Redfin’s Homebuyer Demand Index–a measure of requests for tours and other Redfin buying services–is up 14% from its October low. Still, Redfin doesn’t expect sales to tick up until well into January.

"This week's mortgage-rate pop can be chocked up to a handful of factors, but the week between Christmas and New Years is typically the slowest of the year for pending sales," said Redfin Deputy Chief Economist Taylor Marr. "We'll know more about the direction of rates and whether the recent uptick in early-stage demand will translate into sales when we're settled into the new year."

Home prices fell from a year earlier in 17 of the 50 most populous U.S. metros

Home-sale prices fell year over year in 17 of the 50 most populous U.S. metros during the four weeks ending December 25.

Prices fell 9% year over year in San Francisco, 6.5% in San Jose, 6% in Los Angeles, 4.5% in Detroit, 4.4% in Pittsburgh, 3.7% in Sacramento, 3.6% in Oakland, CA and 2.3% in Austin. They fell 2% or less in New York, Seattle, Anaheim, CA, Phoenix, Chicago, Newark, NJ, Riverside, CA, Boston and Washington, D.C.

This marks the first time Boston prices have fallen since at least 2015, as far back as this data goes. It’s the first time Washington, D.C. prices have fallen since 2016.

Leading indicators of homebuying activity:

  • For the week ending December 29, 30-year mortgage rates ticked up to 6.42%, the first increase after six weeks of declines. The daily average was 6.55% on December 29.
  • Mortgage purchase applications during the week ending December 21–the most recent period for which this data is available–were essentially flat from a week earlier and up 4.6% from a month earlier, seasonally adjusted. Purchase applications were down 36% from a year earlier. More recent mortgage application data will be released in early January.
  • The seasonally adjusted Redfin Homebuyer Demand Index was up slightly from a week earlier and up 10% from a month earlier during the four weeks ending December 25. It was down 20% from a year earlier.
  • Google searches for “homes for sale” were on par with the previous month during the week ending December 24, but down about 38% from a year earlier.
  • Touring activity as of December 25 was down 69% from the start of the year, compared to a 58% decrease at the same time last year, according to home tour technology company ShowingTime. The significant declines are likely due to the holidays.

Key housing market takeaways for 400+ U.S. metro areas:

Unless otherwise noted, this data covers the four-week period ending December 25. Redfin’s weekly housing market data goes back through 2015.

  • The median home sale price was $351,860, up just 0.7% year over year, the slowest growth rate since the start of the pandemic.
  • The median asking price of newly listed homes was $349,950, up 3% year over year, the slowest growth rate since the start of the pandemic.
  • The monthly mortgage payment on the median-asking-price home was $2,265 at the current 6.42% mortgage rate. That’s up slightly from a week earlier but down $254 from the October peak. Monthly mortgage payments are up 36.7% from a year ago.
  • Pending home sales were down 31.8% year over year, one of the largest declines since at least January 2015, as far back as this data goes.
  • Among the 50 most populous U.S. metros, pending sales fell the most from a year earlier in Las Vegas (-62.7%), Austin (-57.3%), Phoenix (-56.9%), Jacksonville, FL (-55.6%) and Portland, OR (-52.2%).
  • New listings of homes for sale were down 21.6% from a year earlier, one of the largest declines since the start of the pandemic.
  • Active listings (the number of homes listed for sale at any point during the period) were up 18.2% from a year earlier, the biggest annual increase since at least 2015.
  • Months of supply—a measure of the balance between supply and demand, calculated by dividing the number of active listings by closed sales—was 3.3 months, down from a week earlier but up from 1.8 months a year earlier.
  • 28% of homes that went under contract had an accepted offer within the first two weeks on the market, down from 35% a year earlier and the lowest share since January 2020.
  • Homes that sold were on the market for a median of 40 days, up more than a week from 30 days a year earlier and up from the record low of 18 days set in May.
  • 23% of homes sold above their final list price, down from 41% a year earlier and the lowest level since March 2020.
  • On average, 4.8% of homes for sale each week had a price drop, down sharply from 6% a month earlier. It’s up from 2.2% a year earlier.
  • The average sale-to-list price ratio, which measures how close homes are selling to their final asking prices, fell to 98.1% from 100.2% a year earlier. That’s the lowest level since March 2020.

To view the full report, including charts, please visit: https://www.redfin.com/news/housing-market-update-homes-linger-on-market

Posted On Sunday, 01 January 2023 06:25 Written by
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