Since just after the start of the COVID-19 pandemic in the spring of 2020, the real estate market has leaned distinctly in favor of sellers. As the world shut down, both the amount of houses for sale and the number of interested buyers decreased, and while potential buyers started searching for homes again shortly after this, inventory has continued to be limited. Because there have been more people looking to buy than there are properties available for sale, a seller's market was created, which then allowed prices to rise to exuberant heights. According to Rocket Homes, at the end of 2019 the median sale price of a home was $260,345, yet Census.gov says this number shot up to $471,200 by November of 2022.
Bleak statistics aside, there is good news on the horizon for those looking to purchase a home. Redfin reports that some power is finally returning back to buyers. The primary reasoning behind this finding relates to the amount of concessions buyers have recently been receiving during home sales. These include sellers covering closing costs, providing money for home repairs, or agreeing to a mortgage buydown and splitting the cost of mortgage points in order to lower the interest rate (via Redfin).
According to Redfin, there has recently been a drastic increase in concessions. Their records show that, during the end of 2022, 41.9% of home sales involved an agreement to concessions of some kind, which is the highest that percentage has been since July 2020. To put this into perspective, only around 30% of home sales at the end of 2021 involved concessions. Redfin also reports that, at the end of 2022, 22% of purchased properties not only included concessions but were also sold for a lower price than the original listing, both of which were basically unheard of back in 2021. Additionally, while some earlier buyers agreed to bypass crucial steps like the inspection of a home in order to win a bidding war, they're less likely to do so now, note the real estate experts at Sunny & Associates.
It's important to understand that, while this may indicate a return to a buyer's market in the near future, this hasn't happened yet, as inventory is still considered limited and home costs continue to be high. However, some experts are confident that things will shift when it comes to the 2023 housing market.