The Redfin Housing Demand Index increased 6.5 percent from the previous month to a seasonally adjusted level of 130 in January. This marks the highest level recorded since January 2013, the first month measured by the Redfin Demand Index.
The Demand Index is based on thousands of Redfin customers requesting home tours and writing offers. A level of 100 represents the historical average for the three-year period from January 2013 to December 2015.
Compared to December, the seasonally adjusted increase in buyers requesting tours was up 3.2 percent in January, while the seasonally adjusted change in buyers writing offers was up 13.0 percent.
“Soaring stock markets, still low mortgage rates and a steady economy bolstered homebuyers at the start of 2017,” said Redfin chief economist Nela Richardson. “Homebuyers were not just window shopping, they were serious about making offers and getting to the closing table. However, this uptick in homebuyer enthusiasm won’t guarantee strong sales in the coming months. With pending home sales down across the country in January despite strong demand, the lack of supply is a formidable foe for buyers this year.”
Homebuyer demand in January was far above the recent historical average. Compared to January 2016, homebuyer demand was up 22.9 percent, led by a 25.9 percent year-over-year increase in homebuyers requesting tours and an 18.0 percent increase in buyers making offers.
The start of 2017 has brought a notably limited selection for homebuyers, who saw 13.4 percent fewer homes on the market in January than the previous year, with 4.0 percent fewer new listings.
Metro-Level Demand Highlights
Below, we provide a slideshow of local charts for each of the metros tracked by the Redfin Demand Index and highlight noteworthy trends and agent insights from a few markets. If you’d like to learn more about a particular market, please email firstname.lastname@example.org.
Baltimore Offers Tax Credits, Gains Buyers Due to High D.C. Prices
The Baltimore-area Demand Index level was at 157 in January, up 63.8 percent compared to this time last year.
“Most of the offers my homebuying customers have made of late have been part of a multiple offer situation, and the homes I’ve listed have found buyers as quickly as two days, and most within two weeks,” said Redfin real estate agent Chris Calabretta.
“Many builders are taking properties that need updating and renovating them to a high-end level while keeping the original charm, and then selling them for between $250,000 and $500,000, depending on the neighborhood. Developers are renovating to a historical standard required to get what is known as a CHAP credit, which gives buyers a 10-year discounted tax incentive. And depending on the level of renovation, some properties are instead coming with a five-year new construction tax credit. These types of properties are the most popular when they hit the market,” said Calabretta.
And high prices in nearby Washington, D.C. are having an effect on the Baltimore housing market. “A lot of buyers realize that they can take the MARC commuter train from Baltimore and be in D.C. in an hour. More people are now acting on it. Since buying a house here is half the cost, Baltimore is where they’re looking,” said Redfin real estate agent Lynn Ikle.
Boston Buyers Rush to Beat Rate Uncertainty and Expected Higher Prices
The Boston-area Demand Index was at 174 in January, up 34.7 percent compared to the same time last year.
“The market has been unusually busy,” said Redfin real estate agent Sandy Rosen. “The weather has been mild and some buyers are worried about rates going up, so they’d prefer to buy now rather than later. We’re also seeing buyers who expect that because it’s still the winter, prices are lower and there’s less competition if they can just find a home soon.”
“Unfortunately, that’s not actually the case,” said Rosen. “It’s busy enough that prices aren’t especially lower. Instead, sellers are putting their homes on the market at intentionally low prices, drawing 10 or 15 offers and then choosing from among the highest bidders. A home that looks like an incredible deal when it first lists almost always sells for far above the list price.”