{"id":4839,"date":"2023-01-13T06:40:25","date_gmt":"2023-01-13T06:40:25","guid":{"rendered":"https:\/\/imsfund.com\/?p=4839"},"modified":"2023-01-13T06:40:25","modified_gmt":"2023-01-13T06:40:25","slug":"seller-concessions-are-mounting-as-the-housing-market-continues-to-decline","status":"publish","type":"post","link":"https:\/\/imsfund.com\/index.php\/2023\/01\/13\/seller-concessions-are-mounting-as-the-housing-market-continues-to-decline\/","title":{"rendered":"Seller Concessions Are Mounting As The Housing Market Continues To Decline"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div :class=\"{ 'hidden': $store.proContent.showFullPrompt() }\">\n<section class=\"px-4 relative border border-slate-200 mobile-toc lg:hidden\" x-data=\"{open:false}\"><button class=\"flex items-center gap-4 my-2 border-none w-full\"><br \/>\n<svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-6 w-6\" fill=\"none\" viewbox=\"0 0 24 24\" stroke=\"currentColor\" stroke-width=\"2\"><path stroke-linecap=\"round\" stroke-linejoin=\"round\" d=\"M4 8h16M4 16h16\"\/><\/svg><\/p>\n<h2 class=\"font-semibold text-slate-800 text-base m-0 js-toc-ignore\">In this article<\/h2>\n<p><\/button><\/p>\n<\/section>\n<p><span data-preserver-spaces=\"true\">New data from\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.redfin.com\/news\/home-seller-concessions-january-2023\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Redfin<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0shows that seller concessions, such as mortgage rate buydowns and cash credits for repairs and closing costs, are becoming increasingly common as high mortgage rates curb demand for homes. This may be keeping housing prices\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.axios.com\/2023\/01\/05\/home-sellers-are-basically-throwing-money-at-buyers-right-now\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">artificially elevated<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0while the actual cost of buying a home falls\u2014the Case-Shiller Index has been modestly\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/fred.stlouisfed.org\/series\/CSUSHPINSA\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">declining<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0since July, but the situation could be worse than it looks for sellers.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Concessions were popular before the pandemic, but at the peak of the homebuying frenzy, sellers had all the power. Buyers pounced when new homes hit the market, sometimes offering to waive the inspection, while sellers fielded multiple over-asking offers and asked buyers to cover appraisal gaps. Now, as buyers pull back due to affordability concerns, homes are\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/fred.stlouisfed.org\/series\/MEDDAYONMARUS\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">sitting on the market longer<\/span><\/a><span data-preserver-spaces=\"true\">. It\u2019s sellers who are looking desperate, while buyers expect to be persuaded.<\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">How Common Are Seller Concessions?<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">In the fourth quarter of 2022, 41.9% of home sales involved concessions, a record high since Redfin began tracking concessions in July 2020. It even surpasses the portion of homes that sold with concessions during the three-month period ending in July 2020, when homebuying activity hit a wall due to the onset of the pandemic. And it\u2019s a significant increase from the trough. Between April 2021 and September 2022, sellers offered concessions in only about one-quarter to one-third of home transactions.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The data comes from buyer agents across the nation, who reported to Redfin when a seller offered something to reduce the buyer\u2019s total purchasing cost. Cash credits for repairs, <a href=\"https:\/\/www.biggerpockets.com\/blog\/lower-closing-costs\" target=\"_blank\" rel=\"noreferrer noopener\">discounts on closing costs<\/a>, and offers to <a href=\"https:\/\/www.biggerpockets.com\/blog\/mortgage-discount-points\" target=\"_blank\" rel=\"noreferrer noopener\">buy down the mortgage rate<\/a> were all considered concessions. Lowering the listing price was not considered a concession\u2014but some sellers had to reduce their listing price or accept offers under-asking in addition to offering concessions.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">In fact, in 11% of home sales, sellers dropped the price, offered a concession, and still sold below asking. 19% of home sales had a concession and a price drop, and 22% of homes sold below asking even with a concession.\u00a0<\/span><\/p>\n<h2><span data-preserver-spaces=\"true\">Which Markets Are Most Impacted?<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">In <a href=\"https:\/\/www.biggerpockets.com\/blog\/san-diego-real-estate-market\" target=\"_blank\" rel=\"noreferrer noopener\">San Diego, California<\/a>, sellers offered concessions to buyers in 73% of home sales in Q4, an increase of more than 20 percentage points year-over-year. Phoenix and Seattle saw the biggest increase in the share of transactions involving concessions, exhibiting 29.7 percentage points and 25.6 percentage points, respectively.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">This is consistent with predictions from\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.redfin.com\/news\/housing-market-predictions-2023\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Redfin<\/span><\/a><span data-preserver-spaces=\"true\">,\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/fortune.com\/2022\/10\/05\/housing-markets-at-risk-of-25-to-30-percent-home-price-crash-moodys\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Moody\u2019s Analytics<\/span><\/a><span data-preserver-spaces=\"true\">, and other analysts, which suggest the markets that experienced the most rapid increases in home values during the pandemic will be the most vulnerable to price declines. Concessions are becoming more popular in many of the cities that are expected to have the steepest corrections, including Phoenix and Seattle, where home prices have begun cooling\u2014but there are outliers.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">For example, concessions have become slightly less popular in Austin, Texas. About one-third of home sales in Austin involved concessions in the fourth quarter of 2022, down from 38.1% the year prior. The trend of concessions concealing an actual decline in the cost of housing transactions may not be occurring there\u2014but sale prices in the Austin market are\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.redfin.com\/news\/home-price-growth-cooling-fast-austin-boise\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">cooling faster<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0than in many other metros.\u00a0<\/span><\/p>\n<h3><span style=\"font-weight: 400;\">Metros Where Most Home Sales Now Involve Concessions<\/span><\/h3>\n<figure class=\"wp-block-table is-style-regular\">\n<table>\n<tbody>\n<tr>\n<td><b>U.S. Metro Area<\/b><\/td>\n<td><b>Home Sales with Concessions, Q4 of 2022<\/b><\/td>\n<td><b>Year-Over-Year Change<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">San Diego, CA<\/span><\/td>\n<td><span style=\"font-weight: 400;\">73.0%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">20.7 ppts<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Phoenix, AZ<\/span><\/td>\n<td><span style=\"font-weight: 400;\">62.9%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">29.7 ppts<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Portland, OR<\/span><\/td>\n<td><span style=\"font-weight: 400;\">61.6%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">15.8 ppts<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Las Vegas, NV<\/span><\/td>\n<td><span style=\"font-weight: 400;\">61.3%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">22.2 ppts<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Denver, CO<\/span><\/td>\n<td><span style=\"font-weight: 400;\">58.4%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">15.7 ppts<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Sacramento, CA<\/span><\/td>\n<td><span style=\"font-weight: 400;\">55.2%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">11.2 ppts<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Los Angeles, CA<\/span><\/td>\n<td><span style=\"font-weight: 400;\">53.2%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">7.2 ppts<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Atlanta, GA<\/span><\/td>\n<td><span style=\"font-weight: 400;\">51.0%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">14.7 ppts<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/figure>\n<h3><span style=\"font-weight: 400;\">Metros Where Concessions Have Increased the Most<\/span><\/h3>\n<figure class=\"wp-block-table is-style-regular\">\n<table>\n<tbody>\n<tr>\n<td><b>U.S. Metro Area<\/b><\/td>\n<td><b>Home Sales with Concessions, Q4 of 2022<\/b><\/td>\n<td><b>Year-Over-Year Change<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Phoenix, AZ<\/span><\/td>\n<td><span style=\"font-weight: 400;\">62.9%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">29.7 ppts<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Seattle, WA<\/span><\/td>\n<td><span style=\"font-weight: 400;\">46.0%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">25.6 ppts<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Las Vegas, NV<\/span><\/td>\n<td><span style=\"font-weight: 400;\">61.3%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">22.2 ppts<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">San Diego, CA<\/span><\/td>\n<td><span style=\"font-weight: 400;\">73.0%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">20.7 ppts<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Detroit, MI<\/span><\/td>\n<td><span style=\"font-weight: 400;\">42.0%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">20.4 ppts<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/figure>\n<h2><span data-preserver-spaces=\"true\">How Can Investors Benefit?<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">If you asked a seller for concessions in the summer of 2021, you might have been laughed out the door. But it\u2019s no longer unreasonable to expect mortgage-rate buydowns, warranties on home appliances, and cash credits for repairs or closing costs, even if you\u2019re making an offer that\u2019s less than asking. Keep in mind that homeowners made vast equity gains over the last two years\u2014many are in the situation to be able to fund concessions without losing money on their homes. And the more you can reduce the cost of the transaction through concessions, the more you can increase your return.\u00a0<\/span><\/p>\n<div id=\"hero-block_62df1a82bfc88\" class=\"first:mt-0 hero-block    has-background has-slate-200-background-color has-text-color has-theme-gold-color\">\n<div class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n<div class=\"relative z-30 w-full \">\n<main class=\"py-4\"><\/p>\n<p class=\"has-slate-800-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Find an Agent in Minutes<\/p>\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:16px\"><strong>Match with an investor-friendly real estate agent who can help you find, analyze, and close your next deal.<\/strong><\/p>\n<ul class=\"has-slate-800-color has-text-color\" style=\"font-size:16px\">\n<li>Streamline your search.<\/li>\n<li>Tap into a trusted network.<\/li>\n<li>Leverage market and strategy expertise. <\/li>\n<\/ul>\n<p><\/main><\/div>\n<div class=\" first:mt-0 relative h-full lg:flex lg:items-center\">\n<picture decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  shadow-xl rounded-md hidden lg:block sp-no-webp\" title=\"The Wrath Of The Buyer's Market Is Here\u2014And Sellers Are Suffering 2\"><source srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Agent-Finder-Block-2.webp\" type=\"image\/webp\"><source srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Agent-Finder-Block-2.png\" type=\"image\/png\"><img src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Agent-Finder-Block-2.png\" decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  shadow-xl rounded-md hidden lg:block sp-no-webp\" title=\"The Wrath Of The Buyer's Market Is Here\u2014And Sellers Are Suffering 2\" alt=\"find an investment-friendly real estate agent\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Agent-Finder-Block-2.png\"\/><\/source><\/source><\/picture><\/div>\n<\/div>\n<\/div>\n<p class=\"italic\"><b>Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n<\/div>\n<p><br \/>\n<br \/><a href=\"https:\/\/www.biggerpockets.com\/blog\/seller-concessions-grew-in-q4\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In this article New data from\u00a0Redfin\u00a0shows that seller concessions, such as mortgage rate buydowns and cash credits for repairs and closing costs, are becoming increasingly common as high mortgage rates curb demand for homes. This may be keeping housing prices\u00a0artificially elevated\u00a0while the actual cost of buying a home falls\u2014the Case-Shiller Index has been modestly\u00a0declining\u00a0since July, [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":4840,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"fifu_image_url":"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/01\/price-reduced-sign-1024x517.jpg","fifu_image_alt":"","footnotes":""},"categories":[9],"tags":[],"class_list":["post-4839","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"_links":{"self":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/4839","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/comments?post=4839"}],"version-history":[{"count":1,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/4839\/revisions"}],"predecessor-version":[{"id":4841,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/4839\/revisions\/4841"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/media\/4840"}],"wp:attachment":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/media?parent=4839"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/categories?post=4839"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/tags?post=4839"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}