Control of the house-purchase process may be shifting toward homebuyers, according to new data from Redfin.
The national real estate brokerage found that sellers gave buyers concessions in 46.2% of home sales in the three-month period ending May 31, up from 43.1% a year earlier. It is the highest share of concessions for any spring period since Redfin began tracking the statistic in 2019.
A concession is something that helps reduce a buyer’s total cost of purchasing a home but does not include the lowering the list price. Concessions can include money toward repairs, closing costs or mortgage-rate buydowns.
Redfin found that seller concessions are at record-high spring levels because nationwide there are currently 47% more home sellers than buyers in the market. The uneven mix is forcing sellers to figure out ways to lower the price of a home.
Also playing roles are historically high mortgage rates and home prices. Some potential buyers are also hesitant to make deals due to the economic impacts of the Iran war, ongoing inflation concerns and worries about job security.
“With more inventory and less competition, buyers can be selective and negotiate for everything from repairs to closing costs,” said Amanda Peterson, a Dallas-based Redfin Premier agent quoted in the report. “Sellers — especially those with dated homes that haven’t been renovated in decades — are increasingly willing to make concessions because they can be the difference between securing a buyer and leaving their listing sitting on the market.”
Peterson also spoke of some sellers being stuck in the mindset of the 2021 market, when they had leverage over buyers. Those sellers are often pricing homes too high, which is making concessions even more necessary to close a deal.
The Sun Belt is leading the way for regions offering concessions, mainly because the once red-hot housing market in those areas appears to be slowing down as the number of sellers outpace the number of buyers. Many Sun Belt cities quickly built new housing stock to meet pandemic-era demand, but Redfin notes that the supply of new homes is now piling up.
Home sellers in Nashville, Tenn., for instance, gave concessions in 75.5% of home sales during the three months ending in May, the highest share among the 28 major U.S. metropolitan areas included in the report. It was followed by Charlotte, N.C., where 71.4% of sellers gave concessions to buyers. Atlanta was next, at 68.7%, followed by Phoenix (65.6%) and Raleigh, N.C. (64.1%).
Concessions were least common in New York City, where just 2.9% of home sellers gave concessions during the three-month period. It was followed by the San Jose area in California, which offered concessions in 5.9% of home deals, and San Francisco, where 14.9% of home sales involved concessions.
Concession rates decreased in 11 of the 28 markets analyzed. Seattle saw the largest drop, from 66% during last year’s March-April-May period to 48.8% during this year’s period.
Home prices are also beginning to fall, with 15.7% of home sales during this period including both price drops and concessions. That is an increase from 12.8% a year earlier and the highest share for the spring season since Redfin began keeping records in 2019.
