Redfin estimates there were 37.2% more home sellers than buyers in November, which is the largest gap since 2013 outside of last summer. The computer warned that the US would experience a buyer’s market until 2028. The imbalance does not translate into some 2008 era real estate crisis, but it highlights the confidence cycle we are in.
When you get a large seller/buyer gap, the press assumes demand is gone, and prices must plunge. What they are missing is that we have created a market that is trapped by interest rates.
The real story is that the seller is anchored mentally to 2021 pricing while the buyer is trapped in 2026 financing. Millions of homeowners refinanced into ultra-low mortgage rates. People with a 2.5% or 3% mortgage are not rushing to sell and then borrow at 6%+ again. They will sit tight unless forced by job relocation, divorce, death, pregnancy, taxes, or financial stress. Buyers are scarce because affordability is terrible, and sellers increase anyway because life events still happen.
Redfin points out that markets like Austin were showing the strongest buyer’s-market conditions, while places like Nassau County, NY were still strong seller’s markets. There is no “one housing market.” There are 50 different markets, each with different taxes, job conditions, migration patterns, and political climate. Furthermore, there are markets within those state markets as people flock to the most desirable cities and school districts.
The buyer base has been destroyed by the combination of high prices, high rates, and rising cost of living. People do not buy houses when they feel trapped and insecure. That is why housing turns down with a decline in confidence.