Yahoo Finance Housing: Homebuyers have it better than last year — but not by much
Housing conditions are easier to swallow for homebuyers versus 2022, but persistent inventory challenges are keeping the market from fully turning in their favor, according to three agents.
"We were at such a hot fever pitch last year and everybody knows a fever is not good," Kathy Casey, Coldwell Banker Residential Brokerage realtor based in Denver, Colorado, told Yahoo Finance LIVE (video above), "So I just feel like we're slow and steady now, we have a more stable and more sustainable market."
Homebuyers have gained some negotiation power in the current market due to elevated interest rates curbing demand.
"I actually think it's better for buyers than it was last year even though the interest rates are higher because number one, you're not paying over asking, you were getting seller concessions, and interest rates are high, but there's workarounds on that as well," Casey said.
But the scale hasn’t tipped fully to buyers due to plunging inventories that have kept home prices elevated and competition high.
The total number of US homes for sale declined 6% from a year earlier during the four weeks ending June 11, the largest drop in 13 months, according to Redfin. New listings plunged 23%, continuing a 10-month streak of double-digit declines.
"So buyers out there just don't have much to choose from," Melanie Atkinson, a realtor with Smith and Associates in Tampa, Fla., said. "So the supply has not increased much, which means the prices haven't dropped too much."
Many potential sellers are holding onto their homes rather than buy in a supply-starved market at rates more than double their current one.
"It's still a seller's market, it's still a competitive market," Dan O'Brien, Trueblood Real Estate realtor based in Indianapolis, said. "But it is certainly a different ballgame than it was 12 to 18 months ago."
That may come to a surprise to those homeowners who are listing properties. The pandemic home-buying frenzy is fizzling.
"Now sellers are saying, ‘well, wait a second, where are all these offers and where are the waived inspections and waived appraisals?’" O'Brien said. "But at the end of the day, it is a much healthier market."
Unlike the housing mania during the pandemic, sellers are getting fewer offers these days. On average, homeowners received 3.1 offers in April, down from 5.5 offers a year ago. Since the pandemic, the average number of home offers bottomed at 2.2 bids in December 2022, according to data provided by Apollo Global Management. (Disclosure: Yahoo Finance is owned by Apollo Global Management.)
"[Buyers] actually have a chance to think about buying a house before they have to jump in against 40 other offers," O'Brien said.
Casey agreed, noting that buyers “don't have to make a decision in 10 minutes for the house that they want to buy.”
That’s a plus for buyers because more than 86% of pandemic homebuyers now have buyer's remorse, according to a 2022 Hippo Housepower report. Of the regrets, nearly half of respondents who bought a home in 2022 said homeownership is more expensive than they expected, and 47% said there are too many unpredictable issues, Hippo survey found.
"I think they had to make their decisions so quickly. And they really wish they would have gotten the third bathroom or the fourth bedroom or in a better neighborhood," said Casey.
Competition remains for 'nice homes'
While buyers are getting some relief from waning demand, there are still homes that remain popular in the market.
"In Tampa, one of our biggest problems is quality of inventory," Atkinson said. "So if you have a house that's really well-prepared, then that house typically will have a lot of offers."
Buyers are leaning toward turn-key properties, those that are move-in ready. Fixer uppers can come with financial uncertainties. For instance, 53% of people who buy houses that need fixing surpass their remodeling budget, according to a Buildworld.com survey.
"Nicer homes are still very quick at selling," O'Brien said about the Indianapolis market.
That’s also occurring in California’s luxury market, Josh Altman, co-founder of the Altman Brothers, a real estate agent firm that focuses on luxury homes, told Yahoo Finance Live in a separate interview.
"I can tell you in any market anywhere, if you build a great house, you build the trophy, there's always somebody willing to pay for it,” Altman said.
Rebecca Chen is a reporter for Yahoo Finance and previously worked as an investment tax certified public accountant (CPA).
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