Homebuyer Buzz: Homes Selling Quickly Even as Some Buyers Sit Out
November 4, 2021
Homebuyer Buzz is our monthly round-up of news stories related to the latest in homebuying trends — from the evolving wants of homebuyers to design news and more.
While consumer confidence increased in the latest index, some homebuyers are getting discouraged by higher home prices. Still, tight inventory is influencing quicker sales according to Redfin. Meanwhile, interest in relocation appears to be declining slightly from a peak in the first quarter, while bidding wars are slowing down.
Consumers are feeling more confident in general
October’s Consumer Confidence Index increased. Reversing a three-month downward trend, the Consumer Confidence Index increased to 113.8 from 109.8 in September. The reversal is likely because concerns about the Delta variant eased, according to Lynn Franco, the senior director of economic indicators at The Conference Board. Importantly, the proportion of consumers planning to purchase a home increased last month according to the index. [HBS Dealer]
Still, some buyers feel discouraged by pricing
The share of prospective buyers decreased in Q3. Eye on Housing found that the share of prospective buyers actively trying to find a home decreased in the third quarter to 57% from a high of 61% in the second quarter. It’s likely fast-growing home prices are discouraging a segment of buyers. According to Eye on Housing’s analysis, most buyers actively searching are also spending more time looking for a home, with 66% reporting spending more than three months looking. [Eye on Housing]
Buyers also concerned affordability is worsening. The latest NAHB Housing Trends report also indicates that homebuyers’ perceptions of housing affordability have worsened for the last three quarters. According to the report, 73% of buyers estimated that they could afford less than half the homes listed in their markets. That share is up from 71% in the second quarter and 65% from the start of the year. [NAHB Now]
Speaking of high prices, here are the most expensive zip codes. The most expensive zip code in the country is in Atherton, California, a Silicon Valley suburb. The area has a median home list price of $8.95 million. Other zip codes on the top 10 list include Miami Beach, FL, Sagaponack, NY, and Palo Alto, CA. Nearly two-thirds of the 100 most expensive zip codes in the country are located in California. [Realtor.com]
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Redfin data shows decreased bidding wars, fast sales
The number of bidding wars declined in September. For the fifth consecutive month, Redfin reported that bidding wars for home sales declined. In September, 58.9% of offers resulted in a bidding war, which is the lowest rate for 2021 and is on par with year-over-year levels. In August, 60.8% of offers written by Redfin agents resulted in a bidding war. The rate peaked in April 2021 at 74.3%. [HousingWire]
Homebuyer demand: Fast home sales are increasingly common. A third of homes are getting snatched up by buyers within a week of hitting the market, according to Redfin. That’s up 30.8% from the end of summer. The pace is a result of an imbalance between the number of homes for sale and the number of buyers. [Redfin]
Homebuyer interest in relocation could be waning. Another Redfin report found that 30.2% of Redfin.com users were looking to move to a different metro in the third quarter of this year. That’s down from 31.1% in the second quarter and 31.5% in the first quarter. This percentage has been declining for the past two quarters after four straight quarters of increases. Interest in relocation is still higher than it was a year ago and pre-pandemic. [Redfin]
Competition heats up for smaller homes, while built-for-rent shines
Older buyers are competing with younger buyers for smaller homes. Downsizing older buyers are finding themselves in competition with younger buyers for homes with less square footage. The supply of homes with up to 1,400-square-feet are at a nearly five-decade low, according to Freddie Mac, which is an attractive size to both seniors looking to age in place and first-time homebuyers. [Realtor.com]
The built-for-rent revolution continues. Built-for-rent home building is growing fast and gaining a great deal of attention. In this model, home builders can build the homes on behalf of an investor or operator who will rent the homes. However, there’s a struggle in finding enough builders and enough land to meet the level of demand. Demand for the building type has been coming from millennials, young families, empty nesters and retirees. [Builder and Developer]
Smart home market projected to grow
The smart home market is projected to reach more than $130 billion. A new market research report is forecasting that the smart home market will reach $138.9 billion by 2026, up from $84.5 billion in 2021. Demand has been driven by the increasing number of internet users and adoption of smart devices. The “entertainment and other controls” segment is expected to account for the largest share of the market during the forecast period. [PR Newswire]