LOS ANGELES (KABC) — For the first time in years, buyers may have the upper hand in the housing market. According to a study published by Redfin, there are nearly 500,000 more sellers than there are buyers in the U.S.
As of April, the U.S. housing market had nearly 34% more sellers than buyers shopping for a home, according to an analysis by Redfin.
Aside from April 2020, when the pandemic brought the economy and home sales activity to a standstill, there haven’t been this few buyers in the market for a home before, based on records that date back to 2013.
The trend is good news for home shoppers – if they can afford to buy at current mortgage rates and prices, which are still rising nationally, albeit more slowly.
“The inventory has finally gone up. We’ve had really low inventory it’s been really tough. We’re finally getting inventory, and I was thinking buyers are going to come in and we’re going to start really moving, but it hasn’t happened,” said Jennie Izumi, a realtor with Berkshire Hathaway HomeServices Crest Real Estate.
Fewer buyers means less competition for home listings and more pressure on sellers to dial back their asking price and make other concessions to help get a deal done. That’s a stark reversal from just a few years ago, when it wasn’t uncommon for homeowners to receive offers well above their asking price from multiple home shoppers.
The balance of power in the U.S. housing market has shifted toward buyers, but a lot of sellers have yet to see or accept the writing on the wall.
Asad Khan – Redfin senior economist
“The balance of power in the U.S. housing market has shifted toward buyers, but a lot of sellers have yet to see or accept the writing on the wall,” said Asad Khan, a senior economist at Redfin.
The market shift is seen in Los Angeles, where the median sale price hovers around $900,000 and sellers outnumber buyers by about 45%.
Izumi, who has nearly 16 years of experience as a realtor, says despite the increase in sellers, she believes buyers are scared.
“I think they’re scared. They’re afraid of the interest rate. They’re afraid of making the payment and they’re afraid that if the market does changeover that they could possibly be upside down,” Izumi said.
The lopsided balance between buyers and sellers is reflected in home sales, which remain in a slump going back to 2022, when mortgage rates began to climb from the rock-bottom lows they reached during the pandemic. Last year, sales of previously occupied U.S. homes sank to their lowest level in nearly 30 years. Sales fell last month to the slowest pace for the month of April going back to 2009.
Sellers began outnumbering buyers in November 2023, when the average rate on a 30-year mortgage climbed to a 23-year high of nearly 8%, according to mortgage buyer Freddie Mac. The average rate reached 6.89% this week, its highest level since early February.
All told, there were 1.9 million sellers and 1.5 million prospective homebuyers in April, or 490,041 fewer people in the market for a home relative to sellers. A year ago, there were 6.5% more sellers than buyers. Two years ago, buyers outnumbered sellers by 5.3%.
Redfin based its estimate of the number of sellers in April on active listings, or the number of homes for sale at any point during the month. It estimated the pool of people in the market for a home by creating a model that takes several other data into account, including the typical time it takes for a someone to buy after taking a tour of a home.
Faced with a market with fewer potential buyers, some sellers have opted to lower prices or offer sales incentives, such as agreeing to pay for a buyer’s closing costs or other expenses. Nearly 1 in 5 home listings had their price reduced last month, according to Realtor.com.
The growing imbalance between buyers and sellers should pull U.S. home prices 1% lower by the end of this year, according to Redfin.
“I think that there’s a misconception stating that the market is going to crash and the rates are going to drop, but I think that people need to understand the market is what it is, the rates are what they are and to continue taking that first step into homeownership because there are so many different programs out there,” said Jeannette Ruiz Mayes, a loan officer with First Citizens Bank.
Both Izumi and Ruiz Mayes say the best advice is to educate yourself. They recommend talking to different lenders, realtors and banks to find helpful programs.
“I currently love the city of Los Angeles housing program. They help so many people get in with down payment and closing cost assistance and so if you don’t have that down payment, using one of the assistance programs is really great,” Izumi said.
There is a local homeownership fair happening on June 21, where buyers can get up to $218,000 in down payment assistance. For more information, visit www.facela.org/homeownership-fairs.
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