More Confidence, Less Fear Among Home Sellers; Potential for Increased Inventory in 2013
As the housing market winds down this year, home sellers’ concerns about the economy are beginning to ease slightly and responses to Redfin’s Real-Time Seller Survey point toward increasing confidence for the 2013 selling season.
Last quarter we saw reluctant sellers with low opinions of the current market, but high expectations for the future. Here’s what sellers told us this quarter:
- 40% cited the economy as a major concern with selling, down from 49% in the third quarter;
- 83% believe that they would get a higher price for their home by waiting one to two years, up from 80% in the third quarter, suggesting increasing confidence about the housing market’s future;
- 43% of respondents are considering renting out their home rather than selling it, down from 46% last quarter;
- 31% intend to price their home higher than nearby comparable sales, down just one percentage point from last quarter;
- 15% believe it is a good time to sell, up from 13% last quarter, while 58% believe it is a good time to buy, down from 61% last quarter. Taken together, these indicate that sellers sense a slight market shift in their favor; and
- 37% would choose an all-cash offer over higher offers with conventional or FHA financing, up from 35% last quarter. Despite the perceived market strength, sellers are still wary of appraisals keeping up.
The changes were slight, but they all pointed in the same direction: Sellers are becoming a little more confident about their chances on the market, a little less interested in alternatives to selling (such as renting out the home), and a little less concerned about the economy. If these trends continue over the next few quarters 2013 will likely begin to see an easing of the big inventory squeeze that has made headlines throughout 2012.
About the Survey
This quarter’s seller survey took place over six days beginning last Thursday (October 25 to October 30, 2012), We surveyed 1,287 people who had used Redfin in the last three months and who indicated that they were a homeowner. We excluded anyone from the results who did not indicate an intention to sell his or her home at some point in the foreseeable future, leaving 567 respondents across 20 metropolitan markets in the U.S.: Atlanta, Austin, Baltimore, Boston, Chicago, Dallas, Denver, Las Vegas, Los Angeles, New York, Orange County, Philadelphia, Phoenix, Portland, Riverside / San Bernardino, Sacramento, San Diego, San Francisco, Seattle, and Washington DC.
Data and charts are below. If you’d like the data segmented by market or by other customer demographics, please contact press (at) redfin (dot) com. If there are questions you’d like us to include in the survey next time, please leave a comment below.
The Fourth Quarter 2012 Redfin Real-Time Home-Seller Tracker
Among homeowners planning to sell, the majority intend to list their home sometime in the next six months. The increase in homeowners planning to sell soon is at least partially seasonal, as the next six months now include the spring selling season, but it also points to some pent-up demand to list early in that season. A second trend is less expected at this time of year: the share of homeowners whose home is currently on the market increased, despite the slowest season for new listings typically being the fourth quarter.
Sellers: Housing Market Slowly Shifting Away From Buyers
The gap between how many homeowners believe now is a good time to buy (58 percent) and those that believe it is a good time to sell (15 percent) shrank in the fourth quarter, implying that recent price increases are resulting in a (slowly) growing sense of comfort and confidence among sellers.
The share of respondents who believe now is a bad time to sell fell to just under a quarter.
Nearly Three Quarters of Sellers Believe Prices Will Rise
The percentage of sellers who believe prices will rise either “a lot” or “a little” in the next twelve months rose in the fourth quarter, with dips in all of the less optimistic categories. Nearly three quarters (74.6 percent) of respondents believe that prices will rise in their neighborhood.
The share of sellers who believe that they would get a higher price if they waited to sell their home also increased (from 80 percent last quarter to 83 percent this quarter), remaining eight percentage points above the percentage of sellers who see strength in their neighborhood as a whole.
Market Improvements Make Renting Out a Less-Appealing Alternative to Selling
The share of respondents who indicated an interest in renting out their current home rather than selling it dropped in the fourth quarter, which is what one would expect as homeowners see improving market conditions for selling their home.
Pricing Strategies Unchanged: Many Will Over Price on Purpose
Virtually unchanged from the third quarter to the fourth, slightly less than a third of sellers plan to intentionally over price their home, either to build a buffer for negotiation, or because they are willing to wait until the market values their home as highly as they do (i.e. “take it or leave it”):
Still Willing to Take Less Money for a Sure Sale
Despite the slight shift in perceptions toward a stronger market for sellers, a slightly larger share of respondents indicated this quarter that they would prefer an all-cash offer (37 percent in the fourth quarter, versus 35 percent in the third quarter), even if choosing it instead of higher offers that were backed by financing.
Necessity Continues to Drive Much of Today’s Inventory
When we asked sellers for the reasons that they are selling now, the top two responses were the same as last quarter: Relocation was cited by 31 percent of respondents, while 34 percent pointed to a life event. Most sales are still being driven by the necessity of life events like the birth of a child instead of the lure of higher prices or other market forces.
Fewer Concerns about the Economy
“I’m worried about general economic conditions” was again the most common answer when we asked sellers about their major concerns with selling in today’s market, but the response rate dropped from 49 percent in the third quarter to just 40 percent in the fourth quarter. Only 16 percent of respondents had no major concerns.
“At this point in the housing market, the only opinion that matters is that of the would-be sellers trying to decide whether to put their home on the market,” said Redfin CEO Glenn Kelman. “Economists agree that the market hit bottom some time earlier this year and low interest rates have brought out more buyers than we’ve seen in years, but most sellers decided to wait for better prices. These attitudes aren’t changing dramatically from one quarter to the next, but the direction has been remarkably consistent among both buyers and sellers: the market is slowly tilting in sellers’ favor.”