A recent survey by Redfin, the
Seattle-based real estate company, found some substantial disconnects among
buyers, sellers, and market reality.
They are, the company said, not on the same page when it comes to the
state of the housing market. While
inventories have increased, buyers are still hesitating because of hurdles
presented by affordability and access to credit. Sellers have been slow to acknowledge that
the market is shifting away from them.
Redfin interviewed 707 of their
agents and associates spread across 35 U.S. markets in late June about the
attitudes and behaviors they see in their dual clientele. Just 24 percent of
agents told the company that "sellers have all the power" in their markets,
down from 35 percent three months ago.
While the trend in the sentiment was similar nationwide, there were
regional differences in the degree. In
the upper Midwest only 12 percent of agents think sellers are in charge, half
of the level in the first quarter of 2013.
In the West and Northeast 30 percent of respondents said it was a
sellers' market, down 8 and 3 percentage points respectively.
Redfin Chief Economist Nela Richardson
said sellers appeared to have not yet grasped the change. "In
May, 40 percent of sellers surveyed by Redfin said that they planned to list
their homes above market value even though home sales had dropped by 9 percent
since the year before." It does take
time for sellers to adjust to prices changes, she said, but this latest shift
is longer than the six to nine months that is typical. "Prices
have moved down and then up so much over the past five years that it's even
more difficult for sellers to have a realistic baseline for what their homes
are worth in the current market."
Buyers on the other hand, she said,
have shifted their mindset significantly since last year. "Buyers who have been
searching for a long time may still try to win deals with aggressive
offers. However, new buyers in the
market are much less willing to chase an escalating sale price to compete with
multiple bids. The demand side of real estate is moving from 'please take my
offer' to 'take it or leave it as you please.'
Homebuyers' willingness to walk away from a deal that's a bad fit is
good for them and is ultimately healthier for the housing market."
Inventories have been edging up in
recent months and Redfin said this is overall good for buyers who are now less
willing to jump into bidding wars. At
the same time home prices and interest rates have been rising while access to
credit remains tight - all of them factors that challenge buyers. Forty percent of Redfin agents said it was a
good time to buy, but at the same time in 2013 these responses were at 46
Seventy six percent of agents said
it was a good time to sell, down 10 points from the same time last year. The most common challenge for sellers
according to 58 percent of respondents is the unrealistic expectations they
hold about the value of their homes.
Many researchers seem to feel that young
people born between the early1980s and the early 2000s, the so-called Millennial
Generation, are the key to making or breaking the housing market so Redfin
asked its agents to describe this group's homebuying approach. The words and phrases that came through
repeatedly in the responses included "cautious," "tech-savvy" and
"well-informed." Though responses varied, many said that millennial buyers were
interested in homes with less maintenance, and were willing to sacrifice square
footage to be closer to work and their friends.