According to Redfin, the housing demand index has increased by 5.1% since September. However, this has not translated to offers made on homes. The number of open house tours has increased month-to-month by 11.2% while the number of those writing offers for properties increased by only 8.1%. data suggests that there may be a couple explanations for this. The first being that interest rates have gone up, pushing buyer to find a home before it climbs again. And secondly, that housing inventory from August to September rose 0.7% while traditionally it falls during this period, increasing the number of options a buyer has.
When interest rates increase, especially after a long low increase since the financial crisis, people want to catch a good rate before it slips away. The issue isn’t housing demand, but how it translated to making an offer. Redfin data suggest that many people are in the touring stages of buying a home, hoping to find one they fall in love with. “Buyers tell me they like a home, but they don’t love it. Last year, buyers would jump to offer on a home they only liked, but now they are waiting to fall in love,” says Alec Traub, a Redfin agent in Los Angeles.
Large housing inventory
When we have a large housing inventory it can be great for the buyer, because they have more housing options to choose from. However, according to psychologists, having too many options makes it harder for a buyer to decide in fear that they won’t make the right decision. As a seller, there should be confidence in the fact that many potential buyers are actively seeking to own a home and engage in the touring phase of the process. Nevertheless, sellers should be careful that their asking price is within a competitive range. Unlike last year, sellers don’t have the luxury of pricing their homes above market rate.
If you have questions on how to obtain a prequalification to make an offer, please contact us today.