A level of 100 represents the historical average for the three-year period from January 2013 to December 2015.
Homebuyer demand in December was well above recent historical norms, and the highest level seen in the index’s three years. Compared to the previous December, homebuyer demand was up 26.3 percent, buoyed by a 36.4 percent year-over-year increase in homebuyers requesting tours and 10.2 percent year-over year increase in buyers making offers.
There were 12.6 percent fewer homes for sale in December compared to 2015, as well as a seasonally-adjusted 17.1 percent fewer homes for sale in December, as compared to November.
Compared to November, the seasonally-adjusted increase in buyers requesting tours was up 18.7 percent in December, the highest such increase in three years of tracking, while the monthly, seasonally-adjusted change in buyers writing offers was up 9.9 percent.
Despite 18 consecutive months of year-over-year declines in homes for sale, buyers seemed undaunted. The most recent Redfin Real-Time Housing Market Tracker found that one in three homes sold in December was under contract within two weeks, reflecting a fast market amidst limited supply.
“In general, buyers are attracted to brand-new listings,” said Redfin chief economist Nela Richardson. “In December, we started seeing homes that spent time on the market, perhaps because they were not in the hottest neighborhood or needed renovation, finally get offers. Based on the number of sellers who’ve contacted Redfin this month, we expect a sizeable increase in new listings in the next two months. With new listings on the way and this year’s buyers willing to take a look at older inventory, we anticipate that sales in early 2017 will be strong.”
All of the metros tracked showed increases in demand compared to December 2015, with all markets but Portland (a Demand Index level of 87) showing above-average demand in December.
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 press@redfin.com.
The Seattle-area Demand Index level was at 135 in December, marking the 25th consecutive month of above-average homebuyer demand in the city. Overall demand was up 6.6 percent compared to last year, with 8.6 percent more buyers requesting tours and 3.7 percent more writing offers.
“Chronically low inventory has been an issue in Seattle since the end of the recession,” said Redfin real estate agent in Seattle Kyle Moss. “Growing concern about rising mortgage rates has given homebuyers a renewed sense of urgency to get off the sidelines and find a home as soon as possible. New inventory always hits the market in spring, but the question remains whether or not there will be enough homes available to reach the demand of a city that is teeming with well-qualified buyers and foreign investors. Even compared to the very competitive years of the recent past, we see 2017 as being one of the most competitive years in recent history for Seattle real estate.”
The Demand Index reached a level of 208 in December in the Orange County, California, area, up 91.6 percent compared to the previous year. The number of buyers requesting tours was up 124.3 percent compared to last year, while 28.0 percent more buyers were writing offers.
“Part of what’s driving this surge in demand is the increasingly astronomical cost of renting in the area. Many renters are frustrated with how much they’re giving their landlord and would rather own, so they’re in the market,” said Redfin real estate agent Keith Thomas, Jr.
“But we’ve had few homes for sale, and a competitive year all throughout 2016, which motivated many buyers to search through the holidays to take advantage of what they felt would be less competition,” said Thomas.
“But, even at the end of the year, those homes that were priced right were snapped up, which isn’t something we usually see between Thanksgiving and the New Year. Add in the recent uptick in mortgage rates, which motivated buyers on the fence to try to get into a home before they were priced out, and you have the perfect storm of interested buyers in a tight market,” added Thomas.
The San Francisco-area Demand Index was at 102 in December, a 114 percent increase compared to this time in 2015. San Francisco saw 105.0 percent more homebuyers touring and 132.1 percent more making offers compared to December 2015.
“In 2015 at this time, we were at a peak in pricing in San Francisco. Buyers were discouraged because they weren’t sure if prices were going to continue to climb or if they were going fall. Also, a number of tech companies, including Twitter, announced layoffs in the fall of 2015. Buyers were taking a wait-and-see approach. This year, prices are more stable and with interest rates spiking after the election, we have people wanting to jump in the game before rates go higher. The interest rate spike inspired several of my buyers to put more aggressive offers on homes,” said Winnie Lai, Redfin real estate agent in San Francisco.
With three consecutive months of levels just over 100, San Francisco’s homebuyer demand may have normalized after a tumultuous 2015 and an uneven start to 2016.
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