One real estate agent in Atlanta offered their client a free week-long vacation in an Airbnb owned by the home’s seller as part of a home-buying deal. Another in Charlotte, North Carolina offered an all-expenses-paid cruise.
As the buyer’s market continues, home sellers have had to get creative in incentivizing their sales, and it’s led to some of the highest rates of concessions in years, new Redfin data shows. A recent report from the brokerage and property search platform—which employs the two agents offering the unique concessions—found home sellers gave concessions in 44.7% of home sales in the U.S. in August, a 2.1 percentage-point year-over-year increase, and the highest share in August since at least 2020.
This uptick in concessions is correlated with the strongest ever buyer’s market, with sellers outnumbering buyers by 58% in August, according to Redfin data, the largest gap in the brokerage’s records.
As mortgage rates near 7%, home buyers become wary of borrowing costs, reducing demand for homes. But buyers still in the market also face less competition, and with more sellers entering the market, those prospective homeowners are able to negotiate better terms, including concessions.
These incentives typically include mortgage rate buy-downs, or sellers agreeing to pay for repairs. To win over increasingly selective buyers, sellers are also offering household appliances, or concessions totaling $10,000 to $20,000, according to the report. Some sellers have become so desperate they are dropping the asking price in addition to concessions: In August, 15.8% of homes around the country saw both a price drop and a concession, up from 15.6% a year ago, Redfin found, the highest share since it began collecting the data point.
Concessions are a unique data point when looking at the housing market, according to Redfin Chief Economist Daryl Fairweather. It’s often overlooked, but can give a more nuanced assessment of the state of real estate. For example, the national median home price increased about 2% year-over-year as of August, suggesting that homes are becoming more expensive and seemingly at odds with reduced demand from buyers. But with concessions factored in, Fairweather speculated the data would tell a more accurate story.
“This is more of a guesstimate,” Fairweather said. “But I think if we were to quantify all these concessions…we would see that home prices are down, and people are getting better deals.”
Evidence of a buyer’s market
The cities across the country with the most and least instances of concessions as analyzed by Redfin provide even more evidence of a buyer’s market. The vast majority of places where concessions are the most common are in the Sun Belt, a major buyer’s market as a result of a wave of post-pandemic construction to accommodate an influx of remote workers seeking lower mortgage rates. In Atlanta, the city with the highest prevalence of concessions, 72.8% of homebuying deals included this form of incentive. In Charlotte, 67.9% of deals included concessions.
Conversely, the Bay Area and New York saw the lowest share of concessions, with New York seeing only 5.7% of sales coming with concessions, and San Francisco having 18.6% of sales with concessions. These major metropolitan areas have strong housing markets, with droves of wealthier buyers keeping housing supplies in those areas low.
The continuation of this buyer’s market will be contingent upon inflation, which has been rocked by tariffs and the Iran war, as well as concerns about what some have called a growing AI bubble. The Federal Reserve’s recent rate hike—and expected hikes for the rest of the year—have already been priced into the market, Fairweather said, but other macroeconomic events, such as trade policy or an AI bubble burst, could turn the market on its head.
But there’s another long-term factor Fairweather believes will keep the real estate advantage for the buyer: baby boomers who will eventually sell their homes. Today, the older generation has a tight grip on real estate, accounting for about 42% of purchases and 52% of sales, according to Realtor.com data. While an overall restricted supply of homes has kept many Gen Z and millennial home buyers out of the market, that will eventually have to change.
Boomers are “a large group of homeowners,” Fairweather said. “They’re going to be passing on their homes slowly but surely over the next decade or two, and that will add more inventory to the market, so definitely not the biggest factor right now, but probably the most persistent factor.”
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