Home-buying Demand Strengthens Despite Stricter Lending Standards, Inventory Shortage Looms
April 23, 2020
Not Enough New Homes For Sale
Many sellers continue to sit on the sidelines, if they can afford to wait. In an April survey of 216 prospective sellers, Redfin found only 1 in 5 thought it was a good time to sell, down from 1 in 2 at the beginning of March. So it's no surprise that new listings for the seven days ended
The lack of inventory is one of the leading causes for a lack of sales, along with tighter lending standards and buyer concerns over the economy. Pending sales for the same period are down almost 50% compared to the same time last year.
Demand for Affordable Single-Family Homes Drives Bidding Wars Again
After a few weeks of Redfin buyers being the only bidder or facing competition from one or two other offers, Redfin is hearing stories of bidding wars with four, five, or more buyers and homes selling above the asking price across the country. The stories are eerily similar; well-priced single-family homes have buyers with a stable income and strong credit fighting over scarce inventory.
On the other hand, it's been more difficult to sell a condominium, with pending sales down 56% for the seven days ended
Low Inventory and Buyer Demand Anchors Prices
With inventory down so much, prices have been remarkably resilient. Median listing prices for the seven days ending
Layching Quek, a Redfin agent in
Tighter Lending Standards Will Hit First-Time and Lower-Income Buyers Hardest
Rates for 30-year fixed rate mortgages have continued to hover just under 3.5% for the past seven days, near all-time lows. But as Redfin reported last week, loans are harder to get.
Increased lending standards and concerns over job security, even for folks who are still employed, will limit opportunities for first-time and lower-income buyers. This threatens to deepen the divide between folks who can take advantage of historically low interest rates and those who can't save up a 20% down payment or haven't established their credit.
But where there's a will, there's a way. Recently Redfin has heard stories of multi-generational buyers, with families banding together to buy a home.
To read the full update, please visit: http://www.redfin.com/blog/housing-market-improving-covid-19-unemployment
To view charts highlighting more housing data from this past week, please visit: https://www.redfin.com/blog/housing-market-trends-coronavirus/
Redfin is publishing this housing-market update as a way to inform our customers, not our investors. Even though we're notifying investors through a government filing about this customer update, we're not updating, withdrawing, or affirming the first quarter financial guidance we issued on
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