As the spring homebuying and selling season gets into full swing, real estate brokerage firm Redfin reports that sellers’ confidence in being able to find a buyer has picked up significantly since the start of the year.
At the same time, BMO Harris Bank reports a big increase in the number of Americans who plan to buy a home in the next five years.
Redfin said 25% of respondents in a recent national survey who reported that their home was currently listed for sale or that they were planning to list in the coming year ranked “none” as their most common response when asked to select their top three concerns about selling.
In a similar survey conducted in January, this response was the eighth-most common, with 16% of sellers choosing it, according to Redfin.
Moreover, the number of sellers in the new poll who expressed concern about finding another home to buy fell from 24% in January to 18%.
“Despite strong sentiment among current home sellers, the numbers show prospective sellers have been very slow to list their homes,” Redfin chief economist Nela Richardson said in a statement.
“New listings dropped 2.3% in the first three months of the year compared to the same period last year.”
Richardson said would-be sellers were likely waiting for prices to peak, trying to time the market to capture the largest possible gain.
“Whether the confidence of the current cohort of sellers translates into more new listings in the coming months is the number one question that determines whether 2017 will be a good year or a great year,” she said.
Redfin’s survey was conducted in mid-April, and includes responses from 896 homeowners in 38 states and Washington, D.C. Of this group of respondents, 179 either said their home was currently listed for sale or would be within the next year.
Several other findings underscored sellers’ high level of confidence this spring.
Twenty-one percent of sellers said they would price high since negotiations were inevitable, up from 15% in January. Still, 51% said they would price in the mid-range based on comparable sales in their neighborhood, down from 54%.
When asked about the balance of power in their market, 20% said sellers had all the power, up from 13.1% in January, while 41% said sellers had a little more power than buyers, up from 36%.
Buying Sentiment Surges
BMO Harris reported that 54% of 2,505 adult Americans polled by Pollara in mid-March said they were likely to buy a home in the next five years, up by 12% from a year ago.
In addition, prospective homebuyers said they were willing to pay an average of $277,000 for a home and would average a 32% down payment.
Among likely first-time buyers, 80% said they planned to get preapproved before making an offer, and 10% said they were already preapproved.
A survey BMO Harris conducted last year showed how much first-time homebuyers were prepared to spend.
In January, the outgoing Obama administration cut annual fees the Federal Housing Administration charges to guarantee mortgages it backs (a popular program among first-time homebuyers) by 0.25%, a move that could be reversed by the new administration.
A big majority of respondents in the new study said they would set a budget before looking for a home.
Sixty-five percent of those in the market for a new home said they would consult a real estate agent, while 61% said they would visit a real estate website and 38% would ask family and friends for recommendations.
“Future buyers are encouraged about their prospects for a home purchase in the near future, and they’re keeping a healthy budget top of mind,” Steven Zandpour, head of retail banking for Chicago Metro North, BMO Harris Bank, said in a statement.
According to the report, 70% of American homeowners spent six months or less looking for a new home before they made a purchase.
In addition, 10% said they had bought their home without participating in an active real estate search — or even any plan to buy at all — because a specific property had caught their attention.
The report also found that 37% of millennial respondents were likely to use a mobile device as a resource to help in their home search, and 45% to rely on recommendations from friends and family when conducting a search.
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