Redfin Agents Report Disconnect Between Buyers and Sellers
by Troy Martin | July 9, 2014
Both face new realities in the heat of the 2014 real estate season
As we head deeper into the busiest time of year for real estate, homebuyers and sellers are not on the same page when it comes to the state of the housing market, according to Redfin real estate agents across the nation. For buyers, an increase in the number of homes for sale hasn’t been enough to bring them back to the market: Affordability and financing hurdles are now holding them back. And sellers are slow to catch on that the market is shifting away from their favor.
“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,” said Redfin Chief Economist Nela Richardson. “Typically it takes sellers six to nine months to adjust to a price change, but this latest shift is longer. 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.”
And the mindset of buyers has shifted significantly since last year, Richardson said.
“Buyers who have been searching for a long time may still try to win deals with aggressive offers,” she said. “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.”
Across Redfin markets nationwide, just 24 percent of agents surveyed told us that “sellers have all the power” in their markets, down from 35 percent three months ago. Sellers have lost the most ground in Midwest markets such as Chicago and Minneapolis, where only 12 percent of Redfin agents now think sellers are holding all the cards, down from 24 percent last quarter. In both the West and Northeast markets, 30 percent of agents said that sellers still have all the power, but that was also down from 38 percent and 33 percent last quarter, respectively.
“Last year in Chicago, the pendulum swung completely toward sellers in terms of the ability to price high and sell fast,” said Redfin agent Dario Medina. “This year, things feel closer to normal. The downtown condo market has really opened up with lots of new inventory, but new, single-family construction in the best school districts still gets snapped up quickly. But on the whole, things seem to be much more balanced than they were last year.”
While increasing inventory is good for buyers, who are now less willing to engage in bidding wars, other factors are working against them, such as access to credit and affordability. In April through June of this year, 40 percent of Redfin agents polled said that it is a good time to buy, down from 46 percent over the same period last year. In regard to sellers, 76 percent of Redfin agents reported that it is a good time to sell, down from 86 percent at the same time last year.
Across Redfin markets, some of the increasing challenges for buyers, according to agents, are qualifying for mortgages (indicated by 16% of agents vs. 8% at the beginning of the year), saving enough for a down payment (18% vs. 11%), and worries about the economy (12% vs 6%). Lack of affordability has become a common challenge for homebuyers, as indicated by 43 percent of agents, compared with 39 percent earlier this year.
When asked about the most common challenges for sellers, 58 percent of Redfin agents said that sellers held unrealistic expectations about the value of their homes, versus 49 percent last quarter.
Redfin Agents in Portland Report Increasing Buyer Interest in Urban Areas; Riverside Agents Tour the BurbsTo get a sense of where people are moving, we asked Redfin agents if their buyers had become more interested in urban or suburban areas, compared with last year. Overall, 8 percent of agents reported “many more” buyers are interested in homes in urban areas compared with last year, with strong urban interest among homebuyers reported by agents in Portland, Oregon (19%), Dallas,Texas (14%), Denver, Colorado (13%), and Washington, D.C. (13%).
Overall, 4 percent of agents reported rising interest in suburban locations, with the strongest interest in areas such as Riverside-San Bernardino, California, where 18 percent of agents responded that “many more” buyers were interested in suburban areas compared with last year. Suburban interest was also high in Atlanta (13%), Boston (10%) and Orange County, California. (7%).
Millennial Buyers Cautious, Well-Prepared, Data-Driven
There has been a lot of interest in the role of the millennial generation (those born between the early 1980s and the early 2000s) in the housing market recently, so Redfin agents weighed in. In this survey, Redfin agents described the home-buying approach of millennial buyers compared with other buyers. Words and phrases that came up throughout 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. Here are a handful of our agents’ responses:
In the length of a tweet (140 characters), how are millennials different than other homebuyers?
“More aware of the market. Know what they want and take serious time to study the homes.”—Redfin Agent Kim Dixson in Annapolis, MD.
“They are more cautious about entering the housing market.”—Redfin Agent Benjamin Silva in South Boston.
“More data driven. They take more control of the process, but appreciate an expert on their side.”—Redfin Agent Jay Ruhm in Chicago.
“Not seeing many millennials who can afford home prices around here!”—Redfin Agent Mia Simon in Silicon Valley.
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About the SurveyThis survey was conducted between June 23 and 26, and respondents included 707 Redfin agents and partner agents. Respondents spanned 35 markets in the U.S., including West: Boulder, CO, Denver, Los Angeles, Las Vegas, Orange County, CA, Phoenix, Portland, Riverside-San Bernardino, CA, Sacramento, San Diego, San Francisco, Seattle, Ventura County, CA; South: Atlanta, Austin, Baltimore, Charlotte, Dallas – Fort Worth, Fort Lauderdale, Hampton Roads, VA, Houston, Miami, Orlando, Raleigh, San Antonio, Tampa, FL, Washington, D.C., West Palm Beach, FL; Midwest: Chicago, Minneapolis-Saint Paul; Northeast: Boston, New York City ( Bronx and Queens), Philadelphia, Rhode Island, Upstate New York.If you’d like to share your thoughts on the housing market with us and stay up to date on all of Redfin’s reports, please subscribe to the RSS feed here or follow us on Twitter, Facebook or Google+.
This entry was posted on July 9th, 2014. redfin.com |
