Are you looking to buy a home right now? If so, it is quite possible that you will have more room to negotiate as compared to the past few years. In fact, the percent of sellers who agreed to a buyer negotiation demand rose 11 points year-to-year to 41.9% in the 4th quarter of 2022. In other words, sellers gave concessions to buyers in 2 out of 5 transactions. For perspective, this was an increase from over 30% in the prior quarter. The previous high in concessions was seen in the early days of the pandemic when we saw 40.8% of all transactions resulting in concessions in Q3 2020.
Market dynamics
Although rising mortgage rates seem to get most of the blame for the slowdown in buyer demand (and deservedly so), there are also other factors at play. Of course sky high inflation and overall economic uncertainties have greatly impacted consumer spending. With many would-be home buyers feeling concerned about not only the future of home prices but also the overall economy, it is quite natural for home buying to slow down considerably. This has resulted in a significantly lower amount of buyers in the market and has ultimately led to sellers having to be considerably more negotiable than they have historically been over the past few years.
Seller concessions for Florida metro markets
Not surprisingly, we have seen an increase in seller concessions across the major Florida metro markets. Interestingly, the percent of seller concessions seen in both the Miami and Tampa markets was lower than the national average. This is likely a sign of continued stronger buyer demand in these markets on a relative basis. Below are how the 3 major Florida metro markets have fared as compared to the national average:
- Miami: 34.8% in Q4 2022 compared to 28.7% in Q4 2021, a 6.1% increase
- Orlando: 47.8% in Q4 2022 and 30.0% in Q4 2021, a 17.8% increase
- Tampa: 37.3% in Q4 2022 and 24.1% in Q4 2021, a 13.2% increase
- National Average: 41.9% in Q4 2022 and 30.9% in Q4 2021, a 11% increase
Summary
As time goes by, more sellers are realizing that the current housing market is far from what was seen during the pandemic. With this said, rather than receiving multiple offers within the first few days on the market, they are fortunate to receive one offer that likely will come with some seller concessions. For buyers, this is not to say that “low ball” offers will be warranted, but there is a good chance that a property can be purchased for under the list price. (A thing that was unheard of during the pandemic.) Ultimately, seller concessions are quite common during a normal housing market and thus we are getting back to normal.
Are you looking to buy or sell real estate in the South Florida market? We can help. Contact Natasha at Live South Florida Realty, Inc. today! From Port Saint Lucie south through Miami, we have a team of real estate professionals ready to assist. Also, be sure to download the free Florida Home Search app for your smartphone or tablet as well.
