It was just last spring that home buyers in most of the nation were digging ever deeper into their pockets, bracing for a bidding war on whatever property they chose. And now, suddenly, they’re not. Home sales have slowed to a crawl nationally, and it’s not just the winter temperatures. The market’s pulse has become weaker, especially in areas that were hottest just last spring.
Just 32 percent of offers written by Redfin, a real estate brokerage, saw competing bids. That is down from 45 percent in November of last year.
In Seattle, where demand has outstripped supply for years, the drop is more abrupt. More than half of homes a year ago saw bidding wars, while less than a quarter are seeing them now.
Home values in Seattle were the hottest in the nation last spring, up 13 percent annually in April, according to the S&P CoreLogic Case-Shiller Index. That gain was down to 8 percent in September, the most recent reading. And supply in Seattle is up 60 percent compared to a year ago, according to Realtor.com.
In Los Angeles, 68 percent of properties for sale saw multiple offers a year ago. That is now down to 38 percent. In Southern California overall, home sales in October were at the slowest pace for that month in seven years, according to CoreLogic.
“Rising prices and mortgage rates have priced out some potential buyers while causing others to conclude that waiting to buy could pay off, especially as listings rise,” said Andrew LePage, a CoreLogic analyst. “For the past three months, sales have fallen year over year in all six counties and, in the last two months, across most major price categories including above $1 million.”
Mortgage rates rose sharply in September, and by October, the average rate on the 30-year fixed was more than a full percentage point higher than a year ago. With home prices already overheated in many major markets, higher rates broke the bank for most buyers.
Inventory jumped in formerly hot markets like San Jose (+123 percent), Seattle (+96.5 percent) and Oakland (+60 percent) but other markets are still seeing drops, like Philadelphia (-24 percent and New Orleans (-19 percent).