The property market in the US has been in a price tug-o-war between supply and demand for over two years and, according to Redfin’s CEO Glenn Kelman, things are finally starting to look reasonable again. More and more homeowners who were holding on to their property in expectation of better mortgage rates are finally facing the reality of the situation. With close to 2,000 lead agents and operating across 100 markets in Canada and the US, Redfin is one of the bigger players in the US housing market.
Housing prices are already falling across the country, with some significant cuts in costs in Florida and Texas. On one hand, the median US home sale price is as high as it has ever been, at $394,000 in the four weeks leading up to the end of the first week of June. On the other, asking prices are declining steadily, pushed by growing supply. Homeowners are being pressured by their own needs, financial and otherwise, to finally put up their homes for sale. Commenting in a recent interview on ‘The David Lin Report’, Kelman elaborated; “A lot of our customers are folks who got a divorce last year, and the husband and the wife are driving each other crazy, or they own a townhouse, and they’ve had a third child, and they’re just bursting at the seams.” As the description reveals, a moving market is as much a consumption-related decision for the supplier as the consumers themselves.
According to Redfin’s housing data, which goes as far back as 2012, the number of homes that had remained in listings for over a month has been increasing steadily for quite some while. According to their database, two in five listings sit on the market for two months – or more. The situation has remained unchanged since 2023 and is a 27.8% increase since 2022. Meanwhile, the number of new listings and the speed at which listings are increasing are growing steadily, up from 13% since last March.
The only change so far is the slight decline in the daily average mortgage rates, resulting in increased applications for mortgage purchases. Another housing cost factor reigniting the market is the slow dip in monthly payments: the typical homebuyer’s monthly housing payment fell by $30 below April’s peak to a new average of $2,829. Redfin estimates that mortgage rates will continue to fall throughout the summer despite the solo interest rate slash that the Federal Reserve promised for the rest of the year. Indeed, the only cause for fear is whether demand will outstrip supply, in which case there is a danger that prices could surge even further.
The ‘Sun Belt’, or the Southeast and Southwest coasts of the US, are currently enjoying the sharpest declines in asking rent. According to Redfin Senior Economist Sheharyae Bokhari,
“The Sun Belt has built a ton of new apartments in recent years, partly to meet the surge in demand brought on by the flood of people who moved in during the pandemic housing boom. But the boom is over, and now property owners are struggling to fill vacancies, which is causing rents to fall. The good news is that the uptick in housing supply in the Sun Belt has improved affordability for renters, which can be a lesson for other American cities grappling with housing affordability challenges.”
On the other side of the country, states like Florida are also seeing a surge in housing supply albeit for very different reasons: the prevalence of natural disasters in the state is dissuading many from settling down.
Housing is starting the slow metamorphosis into a buyer’s market right now, and those who are looking for some space on a time crunch can benefit even now by thinking creatively. Many homes are outdated but aren’t completely run down, giving prospective buyers a chance to touch them up without hurting their budget. If they’ve been sitting on the market for a while, the chances are that the homeowners are also more than ready to see them off. Lesser known locations can also be on the cheaper side, as they tend to take longer to sell. If you’re looking to buy, you will likely be able to get the property at the asking price instead of having to fight for it. Condos, which tend to go overlooked by most are also often sold under the asking price due to their unpopularity in the market.
(Theruni Liyanage)