Here’s a sign that the housing market is approaching something that resembles normalcy: When asked why they’re selling their homes now, respondents to Redfin’s latest survey of 730 home sellers were more likely to cite typical life-cycle motivators like upgrading or downsizing than wanting to get another home under contract before a looming mortgage rate hike.
Last year, 59 percent of sellers cited buying another house before prices or interest rates rise as a top reason to sell. This October, just 16 percent of sellers listed that reason, reflecting the fact that interest rates remain at historically low levels and they have been low on buyers’ list of worries this year. Sellers’ most common answers were wanting a larger or nicer home (29%), relocating to a new city (27%) and wanting a smaller home (21%). This is a big change in sentiment from our October 2014 seller survey, when concern that mortgage rates and home prices would soon rise was home-sellers’ most common motivation.
After the aforementioned life-cycle drivers, sellers’ most common reason for listing now was to pull out the profit they’ve made on their home, with one in five sellers choosing that response. Home sellers in Denver reported using the money they made on homes they bought two to three years ago to pay for graduate school and start small businesses.
“Seller optimism is flying high right now,” Redfin chief economist Nela Richardson said. “But buyers are more grounded now and pricing a home too high is risky. More sellers are having to drop their initial asking price this fall than a year ago.”
Sellers this year are more confident than last year that the market is in their favor. When asked to describe the current balance of power in the market, 60 percent of respondents said sellers had the power, up from 46 percent last year. Asked to predict where prices will go in 2016, 63 percent said up. Among respondents who are waiting to sell, 27 percent said they aren’t listing quite yet because they think home prices will rise more.
All this positivity is enticing sellers to list at higher prices.
“Many sellers are coming to the market with an expectation that their home will sell for the same amount their neighbor’s did three months ago, but that’s no longer an accurate reflection of the market,” said Boston Redfin agent Scott Driscoll. “Even more than normal for this time of year, I’m frequently reining in seller’s expectations, advising them to consider the very latest data on nearby sales and homebuyer demand.”
It wasn’t all optimism from sellers last month. Respondents voiced general economic conditions discouraging buyers (32%), not finding another home they want (28%) and prices falling before their home sells (28%) as their most common concerns about selling.
This survey was conducted between October 18 and 20, and respondents included 730 current and potential sellers. Respondents spanned markets in 23 states in the U.S., including West: Denver, Los Angeles, Las Vegas, Orange County, CA, Phoenix, Portland, Riverside-San Bernardino, CA, Sacramento, San Diego, San Jose, San Francisco, Seattle, Ventura County, CA; South: Atlanta, Austin, Baltimore, Dallas – Fort Worth, Fort Lauderdale, Houston,Raleigh, San Antonio, Washington, D.C., West Palm Beach, FL; Midwest: Chicago, Minneapolis-St. Paul, Madison, Milwaukee, Northeast: Boston, New York City (Bronx and Queens), Philadelphia, Rhode Island, Upstate New York.
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