After years of sellers holding all the power, the world suddenly has turned against them.
Rising mortgage rates have priced out so many homebuyers that sellers increasingly are forced to make concessions just to get the attention of shoppers.
A new Redfin analysis finds that 41.9% of home sales in the fourth quarter of 2022 involved concessions, meaning the sellers offered the buyers perks like money for repairs, closing costs or mortgage-rate buy-downs.
That is the highest rate of any three-month period since Redfin began tracking concessions in July 2020.
In some metro areas, the concessions rate is much higher. Following are the markets where a majority of sales involved concessions during the last three months of 2022.
8. Atlanta
Home sales in this metro area that involved a concession:
- In the fourth quarter of 2022: 51%
- In the same quarter of 2021: 36.4%
Sellers in Atlanta are more likely to cave into buyer demands than they were in recent years. And that trend may continue for a while.
Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University, said during a recent housing market forecast that he expects a mild recession to cause losses of white-collar jobs, especially in middle management. As he concluded:
“This means that the single-family housing takes it on the chin.”
7. Los Angeles
Home sales in this metro area that involved a concession:
- In the fourth quarter of 2022: 53.2%
- In the same quarter of 2021: 46%
Buyer interest in homes is rapidly waning in Los Angeles, and sellers have noticed.
In fact, the City of Angels is one of “10 Housing Markets Where Home Sellers Are Giving Up.” It doesn’t help that Los Angeles residents — and potential buyers — have been fleeing the city in droves.
6. Sacramento, California
Home sales in this metro area that involved a concession:
- In the fourth quarter of 2022: 55.2%
- In the same quarter of 2021: 44.1%
Few cities have seen home prices fall as fast as Sacramento. That means sellers now have to work harder to get buyers interested.
In the Sacramento Appraisal Blog, Sacramento real estate appraiser and market analyst Ryan Lundquist notes an interesting trend:
“Buyers went from the Fear of Missing Out (FOMO) to the Fear of Getting Stuck (FOGS).”
5. Denver
Home sales in this metro area that involved a concession:
- In the fourth quarter of 2022: 58.4%
- In the same quarter of 2021: 42.7%
Andrew Abrams of the Denver Metro Association of Realtors recently told a local TV station that the Denver housing market went from “fast” in January 2022 to “slow” by December 2022.
Many would-be buyers disappeared as mortgage rates rose. As Abrams said:
“The rate at which interest rates increased has been a dramatic story for the year. And much more impactful than any year that I’ve ever worked.”
4. Las Vegas
Home sales in this metro area that involved a concession:
- In the fourth quarter of 2022: 61.3%
- In the same quarter of 2021: 39.2%
Las Vegas real estate agent Jennifer Graff — founder of New Home Experts — recently told a local TV station that buyers in Vegas have the upper hand in the new year:
“A lot of the builders have, especially towards the end of 2022, slashed prices to get those homes off of their books.”
3. Portland, Oregon
Home sales in this metro area that involved a concession:
- In the fourth quarter of 2022: 61.6%
- In the same quarter of 2021: 45.8%
It’s bad enough that sellers in Portland are having to make concessions just to unload their homes. But to add insult to injury, Portland is also among the “10 Cities Where ‘Porch Pirates’ Are Most Likely to Steal Packages.”
2. Phoenix
Home sales in this metro area that involved a concession:
- In the fourth quarter of 2022: 62.9%
- In the same quarter of 2021: 33.2%
In a summary of Redfin’s findings, Van Welborn, a Redfin real estate agent in Phoenix, says today’s buyers are asking for concessions because they know sellers have enough equity in their homes to give a little during negotiations.
Sellers reluctantly are accepting that reality, Van Welborn says:
“It took a while, but seller expectations are coming back down to earth. Concessions were common before the pandemic, and we may be returning to that norm. Sellers realize they’re not going to get $80,000 over the asking price like their neighbor did last year.”
1. San Diego
Home sales in this metro area that involved a concession:
- In the fourth quarter of 2022: 73%
- In the same quarter of 2021: 52.3%
Nearly three-quarters of sellers are making concessions in San Diego, landing it in first place on this list. The city also had the highest share of concessions a year ago.
Even sellers who convince shoppers to buy are feeling some pain. San Diego is among “9 Markets Where Home Values Have Fallen as Much as 10.6%.”
