It is interesting that inventory is increasing, demand is declining, and yet home prices are staying relatively stable and or increasing based on the latest data from the National Association of Realtors. How accurate is this data? What alternative metric should we also be looking at to see what is truly happening with real estate prices. Hint, the numbers from the realtor association are missing one big piece of information that drastically alters the data. What must you do if you are buying or selling a property?
What was in the data from the National Association of Realtors
The Northeast is seeing some of the highest home price increases over the past year, with prices up 10.3% annually, according to NAR’s report. That’s followed by a 5.2% year-over-year gain in the Midwest and a 4.1% increase in the West. While the South accounted for the largest share of existing-home sales in the first quarter, it posted the slowest annual price appreciation, rising just 1.3% by comparison.
The National Association of Realtors data is missing one huge variable
From the chart below 44.4% of all sales had concessions meaning that instead of reducing the price sellers opted to provide some sort of a concession which could be repairs, a new roof, money towards closings costs, etc… Yet this information is not reported in the median home price. For example, let’s assume that someone were selling a 400k home, to get the sale done they gave the seller 15k towards repairs, closing costs, etc… This means that the “real” selling price was a decline of 4% due to the concessions and the property should sell for 385k as opposed to the reported 400k. This practice has taken off especially with new construction houses that are giving huge concessions via rate buydowns, lower priced mortgages, upgraded kitchens/appliances to keep the house price on paper up so that future sales have high comparables. The issue is that there is no uniform way to report concessions.
Redfin shows a large jump in seller concessions
As mentioned above, home sellers gave concessions to buyers in 44.4% of U.S. home-sale transactions in the first quarter. That’s up from 39.3% a year earlier, and is just shy of the 45.1% record high at the start of 2023.
A concession is recorded when an agent reports a seller provided something that helped reduce the buyer’s total cost of purchasing the home. That could include money toward repairs, closing costs and/or mortgage-rate buydowns. It does not include situations in which the seller lowered the list price of their home or lowered the price due to a negotiation with a buyer.
Sellers are increasingly handing out concessions because the housing market has tilted in favor of buyers. Homebuyer demand is sluggish due to high home prices, elevated mortgage rates and economic uncertainty. At the same time, sellers are facing more competition from each other, with listings now at a five-year high. When buyers have more options to choose from, it typically means they have more negotiating power. Plus, Redfin agents report that many homes are overpriced, which often means they linger on the market, forcing sellers to offer concessions to find a buyer.
What markets should actually be showing declines as opposed to stable/increasing?
If we look at the chart above, we can see big concessions in markets like Seattle, Portland, Atlanta, Denver, etc… Concessions are forewarning that demand is softening and that sale prices are not reflecting the change in demand just yet. In the interim prices are staying “artificially” high on paper but concessions are telling of a whole different outcome. Ultimately in markets with high concessions, we will soon see price reductions as well.
What should you do if you are buying or selling a property
We have seen throughout the last several years that realtors have been targeted for “driving up” home prices due to their commissions and buyers and sellers are trying to go it alone. Unfortunately this could be a very bad decision in today’s market. Even for me as a lender who is intimate with real estate, I don’t have the full information on concessions in every submarket. For example, in a particular neighborhood in Denver, a good realtor would know that concessions are about 7% based on the last sales they have seen, but this data is not available publicly. Very few would have this information other than someone who is in the market every day like a realtor and it could save buyers thousands knowing how deep the concessions are in each market.
Furthermore, it will make the sales process much smoother if sellers’ price realistically and understand what is actually occurring in the market. With this information, I would caution anyone buying or selling against going it alone in this market as there could be huge savings on the purchase side and on the sales side it could mean the difference between selling or not. Note, I’m not a realtor, I am a private lender and am just witnessing the huge changes occurring in the market and wanted to just give some friendly advice to help everyone reading.
Do not trust the headline numbers
The real estate market is in interesting times, mortgage rates are staying much higher than anticipated, consumers are pulling back from large purchases, and the economy has been acting wildly with huge swings in treasuries. On top of all the macroeconomic changes, particular real estate markets are starting to correct with huge increases in concessions. The increase in concessions is hard to quantify as it is not uniformly tracked or reported. But based on what I am seeing, many of the concessions are in the 5-10% range which means that prices are considerably less than predicted now. If I look at Denver this would mean that the median price is not flat, but actually declining somewhere in the 5-10% range.
Although we don’t know the exact amount of each concession, it is indicative of a broad shift in the market which ultimately leads to price declines whether the median number reported reflects this or not, it is still happening. Take any median home price numbers with a grain of salt knowing that they are likely 5-10% lower than reported.
Additional Reading/Resources:
- https://www.redfin.com/news/home-seller-concessions-march-2025/
- https://www.nar.realtor/magazine/real-estate-news/home-prices-are-still-rising-even-by-double-digits-in-some-markets
- https://www.fairviewlending.com/why-are-mortgage-rates-rising-when-they-should-be-falling/
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Glen Weinberg personally writes these weekly real estate blogs based on his real estate experience as a lender and property owner. I’m not an armchair reporter/writer. We are an actual private lender, lending our own money. We service our own loans and own commercial and residential real estate throughout the country.
My day job is and continues to be private real estate lending/ hard money lending which enables me to have a unique perspective on the market. I don’t accept any paid sponsorships or ads on my blog to ensure accurate information. I’ve been writing this for almost 20 years and have over 30k subscribers. Please like and share my blogs on linkedin, twitter, facebook, and other social media and forward to your friends . I would greatly appreciate it.
Fairview is a hard money lender specializing in private money loans / non-bank real estate loans in Georgia, Colorado, and Florida. We are recognized in the industry as the leader in hard money lending/ Private Lending with no upfront fees or any other games. We fund our own loans and provide honest answers quickly. Learn more about Hard Money Lending through our free Hard Money Guide. To get started on a loan all we need is our simple one page application (no upfront fees or other games).
Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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