The number of home sellers making concessions to buyers has nearly doubled since last year, according to a new Redfin report.
More than two in five home sellers have had to make concessions during the selling process to attract buyers.
In the three months ended April 30, 42.9% of sellers made concessions to buyers, up from 25.5% last year, and just shy of February’s record high of 45.6%, according to the report.
These concessions include money towards everything from repairs to closing costs and mortgage rate buydowns.
The report notes concessions are usually less common in the spring market, as more buyers are looking for a home, but high mortgage rates are making it harder for sellers in the current environment, as many house hunters have put their plans on hold.
Homebuilders are also throwing in freebies, according to the report, as they try to sell off their inventory, offering would-be buyers everything from money toward closing costs to gift cards and even free cars.
But concessions aren’t the case in all markets right now. Some markets have so few homes for sale that there continues to be competition driving up prices, and those involved in bidding wars aren’t seeing concessions from sellers, Redfin says.
Shauna Pendleton, a Redfin agent in Boise, Idaho, says high mortgage rates and low supply have thrown the housing market out of whack, but that each deal is different.
“Some buyers are asking sellers for the sun, the moon and the stars in addition to offering below the asking price, and some are requesting no extras because they’re so motivated to secure one of the few homes on the market,” she said. “The one consistency in the market right now is homebuilders handing out freebies. Most builders are offering concessions equal to about 3% of the sale price, which gets credited to buyers at closing, to offload properties. Buyers are using the extra cash to cover closing costs or buy down their mortgage rate.”
Concessions are up most in towns that saw huge activity during the pandemic, but the increase is being seen in many markets across the country as well.
In the three months ending April 30, just under 16% of sellers in Boston gave concessions to buyers, up from 12% a year earlier.
Concessions aren’t the only way sellers are trying to move their homes; they are also accepting less money.
According to the report, 15.7% of sellers dropped their asking price and provided a concession to a buyer during the three weeks ended April 30 – that’s four times more than the number of sellers who did the same a year ago.
Boston condo sellers saw condominiums flying off the market in downtown Boston as recently as a month ago. Now, as some prepare to list their own condo for sale, some Boston condo sellers are on the edge.
Mortgage rates, property taxes, and homeowners insurance and inflation are all on the rise, and many interested Boston condo for sale buyers are dropping out of the market. On real estate sites like Zillow , notes homes are spending more time on the market and sellers are dropping their asking price, which hasn’t been seen in downtown Boston in a long time.
Across the country, agents report working with people who are increasingly unnerved by the prospect of selling a home. Mortgage rates have increased at a historic pace this year, making buying a Boston condo for sale even more expensive. Boston condo buyers are already pinched by high prices.
The increase in borrowing costs has reduced buyers purchasing power in a matter of months. The rate on a 30-year mortgage earlier this month increased to nearly 6% from about 3% at the end of last year. At 6%, a buyer on a $2,500 monthly budget could afford an approximately $400,000 Boston condo—down from $517,500 condo at the end of 2021, according to Redfin .
That has caused some buyers to call off their Boston condo for sale search. In recent weeks, the volume of applications for a loan to purchase a home, as measured by the rolling 4-week average, fell to its lowest levels since the pandemic’s early days, according to Mortgage Bankers Association data. And existing-home sales have fallen, too, declining in May to their lowest level since June 2020, according to the National Association of Realtors.
Boston condo buyers have more choices now, too. The number of active and new listings has increased on a year-over-year basis recently, according to Realtor.com’s gauge.
These shifts aren’t sitting well with Boston Beacon Hill condo sellers seeking top-dollar for their homes. And the cool-down has led some sellers to slash listing prices. While listing prices nationally are still well above year-ago levels, according to Realtor.com data, a record share of home listings saw a price cut last week, according to brokerage Redfin.
Updated: Boston Real Estate Blog 2022
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If you are either a buyer or seller (or both), you need to know what it will mean to your family if you go ahead with the move. You need to understand three things:
1. What is happening in the housing market right now?
Consumers must get past those fear-mongering headlines and gain a deep understanding of what is truly happening. How strong is buyer demand right now? How much competition do listings have today compared to what they will have in the spring? People want to make an educated decision on what is probably their family’s greatest financial asset.
2. Why is it happening?
Understanding the individual pieces that impact the sale or purchase of Boston condos is important. Understanding how those pieces impact each other is critical. How does the amount of a down payment impact the mortgage rate a buyer will be offered? Can you still price your Boston Midtown condo for sale a ‘little ahead’ of the market and still be sure it will sell?
3. How do the first two affect your local market?
Basically, you want an understanding of the overall Boston downtown housing market and a simple and effective explanation of how it will impact your personal real estate goals.
The best way to get all three is to work with a professional downtown Boston condo broker who understands this shifting real estate market and can expertly guide you on the journey to reach your housing goals. Let’s get together to discuss what today’s market means for you.