Redfin Reports Nearly Half of Home Sellers Are Making Concessions to Woo Buyers

Rhea-AI Summary

Redfin's recent report indicates a significant shift in the housing market, with home sellers offering concessions in 45.5% of sales during the three months ending February 28, 2023, the highest share since June 2020. This marks an increase from 31.1% a year earlier. The rise in concessions is attributed to higher mortgage rates and persistent home prices, prompting sellers to incentivize buyers. Notably, 13% of sales featured price cuts alongside concessions. Seattle recorded the largest increase in concessions, with 51.6% of sales including them. Las Vegas had the highest overall concessions at 77.4% of sales.

Positive

• Concessions are offered in 45.5% of home sales, indicating increased buyer incentives.
• Record 13% of sales included both price cuts and concessions.
• Seattle saw a significant rise in seller concessions to 51.6%, showing market activity.

Negative

• Rising mortgage rates have led to decreased buyer demand.
• Average mortgage rates reached 6.73%, increasing monthly payments by nearly $600.

A record 13% of home sales include a price cut and a final sale price below the list price in addition to concessions, which often include money toward repairs and mortgage-rate buydowns

SEATTLE--(BUSINESS WIRE)-- (NASDAQ: RDFN) — Home sellers gave concessions to buyers in 45.5% of home sales recorded by Redfin agents during the three months ending February 28, according to a new report from Redfin (redfin.com), the technology-powered real estate brokerage.

That’s the highest share of any three-month period in Redfin’s records, which date back to June 2020, and compares with 31.1% one year earlier. This is according to data submitted by Redfin buyers’ agents across the U.S.

Concessions have become increasingly common because rising mortgage rates and stubbornly high home prices have caused many buyers to put their plans on hold, which has motivated sellers to throw in freebies to attract the buyers who remain. Redfin agents report that sellers are offering to fund repairs, cover closing costs and pay for bidders to buy down their mortgage rates.

The housing market has done a 180 since 2021, when a surge in homebuyer competition fueled by rock-bottom mortgage rates forced buyers to offer everything but the kitchen sink to win. The average 30-year-fixed mortgage rate is now 6.73%, up from 3.85% a year ago, which has increased the typical homebuyer’s monthly mortgage payment by nearly $600.

“Buyers today are way more demanding and selective. They’re willing to wait to find the perfect house, which wasn’t the case during the pandemic homebuying boom,” said Elena Fleck, a Redfin real estate agent in Palm Beach, FL. “During the peak of Covid, it took two to three days to sell anything regardless of the condition, location, or square footage. Now, a home that's not perfect may stay on the market for three to four months if the seller doesn’t throw in something to sweeten the deal.”

Fleck continued: “Any home with a roof that’s over eight years old is just sitting—buyers don’t want to put any additional funds into repairs. I had a few sellers offer credits for new roofs to close the deal. We’re also seeing more buyers ask for credits toward their closing costs.”

Home Sellers Are Also Slashing Their Prices to Lure Buyers

In addition to offering more concessions, sellers have become increasingly likely to sell their home for less money than they originally hoped for. That can happen when a seller cuts their asking price, accepts an offer below the asking price or both.

A record 25.2% of home sales recorded by Redfin buyers’ agents included both a concession and a final sale price below the list price during the three months ending February 28. A record 20.6% included both a concession and a listing-price cut that occurred while the home was on the market. A record 13% included all three.

Seattle Sees the Biggest Increase in Seller Concessions

In Seattle, sellers gave concessions to buyers in 51.6% of home sales during the three months ending February 28, up from 20.1% a year earlier. That’s the largest percentage-point increase among the 22 U.S. metropolitan areas for which there was sufficient data. Next came Las Vegas (30.6 ppts), Denver (26.2 ppts), San Diego (23.3 ppts) and Phoenix (22.4 ppts).

There were only two metros in which concessions were less common than they were a year earlier: Austin, TX (-3 ppts) and Chicago (-2.1 ppts).

Concessions Are Most Common in Las Vegas

In Las Vegas, sellers gave concessions to buyers in 77.4% of home sales during the three months ending February 28—the highest share among the metros Redfin analyzed. Next came San Diego (74.8%), Sacramento, CA (70.9%), Phoenix (63.7%) and Denver (60.9%).

In New York, sellers gave concessions to buyers in 16.7% of home sales—the lowest share among the metros Redfin analyzed. It was followed by San Jose, CA (21%), Boston (23.1%), Philadelphia (30%) and Austin (33.9%).

To view the full report, including a metro-level table, charts and methodology, please visit: https://www.redfin.com/news/home-seller-concessions-february-2023/

About Redfin

Redfin (www.redfin.com) is a technology-powered real estate company. We help people find a place to live with brokerage, rentals, lending, title insurance, and renovations services. We sell homes for more money and charge half the fee. We also run the country's #1 real estate brokerage site. Our home-buying customers see homes first with on-demand tours, and our lending and title services help them close quickly. Customers selling a home can have our renovations crew fix up their home to sell for top dollar. Our rentals business empowers millions nationwide to find apartments and houses for rent. Since launching in 2006, we've saved customers more than $1 billion in commissions. We serve more than 100 markets across the U.S. and Canada and employ over 5,000 people.

For more information or to contact a local Redfin real estate agent, visit www.redfin.com. To learn about housing market trends and download data, visit the Redfin Data Center. To be added to Redfin's press release distribution list, email press@redfin.com. To view Redfin's press center, click here.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230315005389/en/

Redfin Journalist Services:

Isabelle Novak, 414-861-5861

press@redfin.com

Source: Redfin

FAQ

What percentage of home sales included concessions according to Redfin's February 2023 report?

According to Redfin's report, 45.5% of home sales included concessions during the three months ending February 28, 2023.

What was the average mortgage rate as reported in the Redfin February 2023 update?

The average mortgage rate reported by Redfin was 6.73% as of February 2023.

Which metropolitan area saw the highest increase in seller concessions according to Redfin?

Seattle experienced the highest increase in seller concessions, reaching 51.6% during the three months ending February 28, 2023.

How did the percentage of home sales with price cuts change in February 2023?

A record 25.2% of home sales included both concessions and a final sale price below the listed price, indicating a trend of price cuts.

What factors are driving sellers to offer concessions in the current housing market?

Sellers are offering concessions due to rising mortgage rates and stubbornly high home prices, which have decreased buyer demand.