Home buyers forfeit contracts in the Sun Belt, especially in Las Vegas, Phoenix, Tampa and Texas

The tide has turned and buyers are now forgoing deals in the Sun Belt as rates rise and home prices remain unaffordable.

Once pandemic boom towns, 15.2% of homes in Sun Belt towns that were under contract in August failed, or about 64,000 homes nationwide had their bids dropped, according to a new report from real estate brokerage Redfin Corp. RDFN,
-5.33%
said.

A year ago, only 12.1% of home buyers were abandoning transactions. Typically, 12% of trades failed before the pandemic, Redfin said. But the last time that number increased – before this fall – was at the start of the coronavirus pandemic in March/April 2020.

Buyers were most likely to walk away from deals in the Sun Belt, the company added, in cities including Phoenix, Tampa and Las Vegas. Shoppers were least likely to give up on purchases in major cities, including San Francisco and New York.

“A slowing housing market allows buyers to forego deals, as it often means they don’t need to forego important contract contingencies to compete as they did during the housing frenzy. last year’s home purchase,” Redfin noted.

Contingencies may include inspections to see if there are any problems with the home, or if they can get the required mortgage, or if the appraisal is different from the agreed amount.

“A slowing housing market allows buyers to pull back on offers.”


—Redfin

And “some buyers may also walk away from deals because they are waiting to see if home prices drop,” the company added.

More than a quarter of buyers looking to buy a home in Jacksonville, Florida declined in August, Redfin said, the highest percentage among the 50 major U.S. metropolitan areas. Las Vegas, Atlanta and Orlando followed. (Top 10 list below)

These destinations were hotspots during the pandemic for shoppers because they were affordable and in the age of remote working.

But that has changed.

“Sun Belt cities, including Phoenix, Tampa and Las Vegas, have attracted dozens of house hunters during the pandemic, driving up home prices,” Redfin said.

“Now their housing markets are among the fastest in the country, giving buyers room to pull back,” they added.

Redfin analyzed data from Multiple Listing Services dating back to 2017 to analyze dropouts.

The share of buyers exiting transactions was lowest in Newark, NJ, at 2.7%, followed by San Francisco, Nassau County, NY, New York, and Montgomery County, Pennsylvania.

High fares are a major reason for cancellations. The 30-year is at 6.29% as of September 15. That’s up from 2.88% a year ago.

Houses are also still expensive. As existing home prices fall, the median price of an existing home in the United States is still $389,500 in August, up 7.7% from a year earlier, the National Association said. of Realtors.

“I advise sellers to price their homes competitively based on the current market.”


– Sam Chute, a Miami-based realtor at Redfin

In this difficult environment of nervous buyers, “I advise sellers to price their homes competitively based on the current market,” said Sam Chute, a Miami-based real estate agent at Redfin, “because the offers fail and buyers are no longer willing to pay exorbitant prices.

To be clear, housing market indigestion was deliberately constructed: Falling house prices due to rising rates and sellers’ reaction to falling demand are a ‘good thing’, the president says of the Federal Reserve, Jerome Powell, during a press conference on Wednesday. when they announced the rate hikes.

“Housing prices were rising to an unsustainable level,” Powell said.

“Longer term, what we need is for supply and demand to be better aligned, so that house prices rise to a reasonable level…and people can afford houses again” , he added. “The housing market may need to undergo a correction to get back to this place.”

Here are the top 10 cities where offers fail:

Town Percentage of pending sales that fell out of contract

Jacksonville, Florida.

26.1%

Las Vegas, Nevada

23%

Atlanta, Ga.

22.6%

Orlando, Florida.

21.9%

Fort Lauderdale, Florida.

21.7%

Phoenix, Arizona.

21.6%

Tampa, Florida.

21.5%

Fort Worth, TX.

21.5%

San Antonio, Texas.

21.1%

Houston, Texas.

20.6%

Do you have ideas on the housing market? Write to MarketWatch reporter Aarthi Swaminathan at [email protected]

About Teresa G. Wilson

Check Also

Indians Are Central Texas’ Top Home Buyers: Report

At first, people of Indian descent made up the largest share of international buyers in …