More New Yorkers are buying homes off-market

New York City’s housing market is getting more competitive by the minute. The demand from potential homebuyers keeps growing while the listing inventory remains low. Some buyers, who want to avoid participating in bidding wars, search for ways to buy a home off-market. 

When a seller decides to list their property off-market, the listing can only be shared between agents and a limited number of potential buyers. These listings cannot be viewed by the general public. Some sellers prefer to list their homes off-market to avoid additional prep work and preserve privacy. In addition, if the property is listed on multiple listing services (MLS) and stays on the market for too long, it can lose its appeal to buyers. 

The data released by Redfin shows that since 2019 the number of off-market home sales has increased by 67 percent, from 2.4 percent to 4.0 percent nationwide. Another report demonstrates that 20.6 percent of homes sold in New York City in the third quarter of 2021 were never listed on an MLS. 

“Pocket listings remain a common practice; they can exacerbate segregation and wealth inequality because only certain people are seeing certain listings,” mortgage adviser Arnell Brady told Redfin. “Oftentimes, listings that are pocketed are in high-end neighborhoods. That means people who don’t have an agent in the right professional or social network are missing out on bigger gains in home equity, and may be limited to areas with lower home values.”

Whisper or off-market listings give a major advantage to those with means and connections, especially at a time of limited inventory and higher demand. However, many real estate agents do not support off-market sales and consider them unethical. Several studies have shown that “pocket” listings exclude minority buyers and contribute to segregation in the housing market. 

Overall, off-market listings are most common among luxury home sales. Currently, the number of homes available for sale in New York City cannot compete with the rising demand. Limited supply leads to bidding wars, where some buyers are ready to take extreme measures and pay price premium to avoid competition and buy a home off-market. 

Resources:

“New York elites are snatching up luxury real estate using a method that's against many realtors' code of ethics,” by Alcynna Lloyd and Hillary Hoffower (Business Insider, 2022)

“2 in 5 Real Estate Agents Say Pocket Listings Are Becoming More Common,” by Lily Katz and Ben Walzer (Redfin News, 2021)

“We All Support Fair Housing, So Why Are Pocket Listings Up 67%?” by Glenn Kelman (Redfin News, 2021)

“Brokering Ties and Inequality: How White Real Estate Agents Recreate Advantage and Exclusion in Urban Housing Markets,” by Elizabeth Korver-Glenn (SAGE Journals, 2017)

“HOW AMERICA’S REAL ESTATE BROKERS STILL USE PRACTICES THAT REINFORCE RACIAL SEGREGATION,” by Elizabeth Korver-Glenn (University of New Mexico, 2018)

“The Pros And Cons Of An Off-Market Home Listing,” by Bob Musinski and  Mike Cetera (Forbes Advisor, 2020)