Low mortgage rates mixed with a friendlier lending environment are getting more home buyers to step off the sidelines in search of a new home. Several recent housing reports show a surge in buyer demand this month.
For example, real estate brokerage Redfin’s monthly housing report shows home-tour demand has reached an all-time high, up 62 percent from the same week last year. They also report that signed offers were up 58 percent.
“A rebound in first-time homebuyer interest is helping to strengthen demand this year,” according to Redfin’s report. During the week of Jan. 12, Redfin agents reported that 57 percent of home tours taken were by first-time buyers, compared to 31 percent the week before and 48 percent the same week last year. “It’s also the highest rate of first-timers touring we’ve seen since the end of 2012,” the report notes.
As reported here last week, homebuilders are also finding an increase in buyer traffic. Indeed, economists have been predicting a surge in first-time buyers in 2015, following a long absence in the wake of the housing crisis. Millennials are expected to drive two-thirds of household formations over the next five years, according to realtor.com®'s 2015 housing forecast report.
“In 2015, increases in employment opportunities will empower younger buyers to return to the market and fuel the continued housing recovery,” Jonathan Smoke, chief economist for realtor.com®, said in a 2015 housing forecast report. “If access to credit improves, we could see substantially large numbers of young buyers in the market. However, given a high dependency on financial qualifications, this activity will be skewed to geographic areas with higher affordability, such as the Midwest and South.”
In Redfin’s housing report, the brokerage says that its agents are once again seeing bidding wars and packed open houses that were similar to a housing frenzy in 2013. The difference now is that buyers are competing over homes at more affordable price points.
Redfin agent Klaus Gosma said that more than 130 potential buyers visited a $350,000 three-bedroom Seattle townhouse during an open house over the weekend.
“I have never seen so much traffic at an open house,” says Gosma. “The big draw for buyers was the home’s affordable price point.”
Source: “Home Prices Up 7.6% in January as Redfin Reports Record-Setting Homebuyer Demand,” Redfin Research Center (Jan. 27, 2015) and “2015: Year of the First-Time Home Buyer,” REALTOR® Magazine Daily News (Dec. 5, 2014)