In a recent survey by Realtor.com, it has been revealed that a staggering 82% of individuals looking to buy and sell a home feel "locked in" by low mortgage rates. The survey, which involved over 1,200 recent or potential home sellers, sheds light on the challenges faced by both buyers and sellers in the current real estate market.
Following two red-hot selling seasons in 2021 and 2022, characterized by soaring prices and limited inventory, the real estate landscape has shifted this spring. Although home prices remain 6.3% higher compared to the previous year, price growth has slowed for nine consecutive months, and homes are taking longer to sell.
Bild: Realtor.com
The survey indicates that sellers and buyers are finding themselves in a difficult position due to low buyer demand and a lack of affordable inventory. Interestingly, over 85% of sellers surveyed were planning to purchase a new home simultaneously while selling their current one. This adds complexity to the decision to sell, as many buyers are compelled to accept higher mortgage rates.
The feeling of being "locked in" by low mortgage rates is prevalent among sellers, with more than three-quarters expressing this sentiment. Approximately 50% of sellers plan to wait until rates come down before selling, while 25% intend to proceed with the sale for personal reasons despite feeling constrained. Notably, younger generations, including Gen Z, Millennials, and Gen X, are more likely to feel locked in due to the burden of significant outstanding mortgage debt. Gen X owners, in particular, display a paradoxical trend, with a third planning to sell despite feeling locked in, possibly because they have lower amounts of outstanding debt. In contrast, a majority of Baby Boomers, who generally have less debt, do not feel locked into their current homes by low interest rates.
The survey also delves into the motivations behind selling a home. The top reasons cited by owners planning to sell include the potential for profit, changing family needs, and a desire for different amenities. Gen Z homeowners prioritize affordability and proximity to family as their main drivers.
Despite the challenges in the housing market, a significant number of sellers express satisfaction with the equity they have in their homes. Around 75% estimate having over $100,000 of equity, and 42% estimate having more than $200,000. This high level of equity puts owners in a favorable position for a successful home sale.
Bild: Realtor.com
Furthermore, the survey indicates that potential sellers maintain high expectations for positive outcomes. Even in the current market, more than a quarter of sellers anticipate a bidding war, while 31% expect to receive offers above the asking price. Additionally, 37% believe they will receive an offer within a week. These expectations surpass those held in August 2022 when high mortgage rates impacted the market's momentum.
Bild: Realtor.com
To attract buyer attention in today's market, Realtor.com advises sellers to offer well-maintained, reasonably priced homes. Despite ongoing affordability challenges, buyers are actively seeking move-in-ready homes at fair price points. As new listings remain scarce compared to last year, sellers have the opportunity to capture buyer interest during the Best Time to Sell.
