In January 2017, Redfin surveyed more than 1,000 homeowners who were actively searching homes for sale on Redfin.com. Of 230 respondents who replied they would like to sell their home but were unsure when, one in four said the reason for their uncertainty was because they were worried they would be unable to find a replacement home.
This concern is not surprising given that in January the number of homes for sale dipped to a historic low, the likes of which we haven’t seen since 2013 when the market was just beginning to climb out of the recession.
To further examine the unique conditions faced by those who are considering buying or selling a home this year, we dug into the data for the 10 most supply-constrained markets (based on months of supply in January) that Redfin agents serve: Seattle, Denver, Oakland, Tacoma, Portland, Sacramento, San Jose, Boston, Omaha and San Diego.
Inventory (the total number of homes currently for sale measured on the last day of a given month, regardless of when they were listed) in these 10 combined markets declined by 22.0 percent in January from a year earlier. This marked the 27th consecutive month of year-over-year declines in these hot markets, and the largest such decline since December 2015. The number of new listings (the total number of homes for sale added to the market in a given month) declined for the second month in a row, falling 9 percent in January compared to last year. This is a shift from a year ago when sellers were already in force early in the year with new listings up 2.3 percent at the beginning of the 2016 market.
Last year, Redfin predicted 2017 would set a new record for the speed at which homes sell, measured by the median number of days homes spend on the market before going under contract. Indeed, the year was kicked-off by the fastest January since Redfin began tracking this data in 2010. The typical home in these combined markets went under contract in 31 days: five days faster than the same time last year and more than a full month faster than in 2012 when homes sold in about 76 days.
The typical home remained on the market fewer than 30 days in many of the individual metros we studied, with Denver being the fastest at just 23 days on market in January — 20 days faster than the same time last year. Forty-two percent of the homes sold in Denver were off the market within two weeks of being listed compared to 26 percent last January and a mere 13 percent in January of 2012.
The decline in total inventory is due to the high level of home sales in these markets over the past 3 years. The recent decline in new listings means homeowners have been slow to list their homes for sale despite strong demand from buyers so far this year. These current market conditions create a window of opportunity for move-up buyers. Homeowners who sell now face less competition from other sellers. Sellers who list early this year can take advantage of the fast pace at which homes are selling and be better positioned to buy their next home before competition among other buyers peaks this summer.
Record-high levels of homebuyer demand, paired with an ongoing supply shortage and technological advances that allow people to see and make offers on homes within moments of them being listed, means the market simply can’t replace supply as fast as it’s being removed. This creates both challenges and opportunities for homeowners looking to sell this year. Selling early in the year could help homeowners move quickly when it comes time to buy their next home. Homeowners wanting to move up also need to be vigilant in monitoring online listings so they don’t miss out on new inventory before it’s gone.
“Homes are selling so quickly in Denver because buyers here are savvy, well prepared, and armed with technology that helps them move fast,” said Redfin Denver real estate agent Justin Hess. “Recently, one of my listings was off the market in one day because a buyer who hadn’t even set foot in the home received a Redfin Instant Update as soon as it was listed and made an offer $15,000 above asking. They got the home purely because of their speed, preparation and use of technology. Yes, there are more buyers than there are homes for sale, but the listings are coming. I’m working with several homeowners who plan to wait until spring to sell. I’m advising them to expect an onslaught of offers if they price right, but to remember they are ultimately in control of the pace of the sale and have many options when it comes to finding their replacement home.”
The fast pace of the market may seem daunting to buyers at first, but everyone has the power to act quickly by taking advantage of the right technology that allows buyers to stay ahead of the game:
- Redfin Instant Updates let buyers know when a home that meets their needs appears on the market within 15 minutes of it being listed for sale.
- Book it Now allows buyers to instantly book a tour from their computer or mobile device, ensuring they are the first to get in and tour a home that’s newly listed for sale.
- Redfin 3D Walkthrough allows buyers to virtually view homes in fine detail without ever seeing it in person. Many Redfin buyers know they’ve found the home for them before they’ve even stepped foot inside.
- Hot Homes uses an algorithm developed by Redfin technologists to identify those homes on the market that are 70% or more likely to sell within two weeks in order to show buyers which homes they’ll need to take the quickest action on.
If you are a seller or buyer in need of advice on how to navigate a fast market, you can check out expert insights from Redfin agents here. For downloadable data on all of the markets Redfin tracks, visit the Redfin Data Center.
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