Buyers and Sellers Not on Same Page With Housing Market Reality

A recent survey by Redfin, thernSeattle-based real estate company, found some substantial disconnects amongrnbuyers, sellers, and market reality. rnThey are, the company said, not on the same page when it comes to thernstate of the housing market.  Whilerninventories have increased, buyers are still hesitating because of hurdlesrnpresented by affordability and access to credit.  Sellers have been slow to acknowledge thatrnthe market is shifting away from them.</p

Redfin interviewed 707 of theirrnagents and associates spread across 35 U.S. markets in late June about thernattitudes and behaviors they see in their dual clientele. Just 24 percent ofrnagents told the company that “sellers have all the power” in their markets,rndown from 35 percent three months ago. rnWhile the trend in the sentiment was similar nationwide, there werernregional differences in the degree.  Inrnthe upper Midwest only 12 percent of agents think sellers are in charge, halfrnof the level in the first quarter of 2013. rnIn the West and Northeast 30 percent of respondents said it was arnsellers’ market, down 8 and 3 percentage points respectively. </p

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Redfin Chief Economist Nela Richardsonrnsaid sellers appeared to have not yet grasped the change.   “InrnMay, 40 percent of sellers surveyed by Redfin said that they planned to listrntheir homes above market value even though home sales had dropped by 9 percentrnsince the year before.”  It does takerntime for sellers to adjust to prices changes, she said, but this latest shiftrnis longer than the six to nine months that is typical.   “Pricesrnhave moved down and then up so much over the past five years that it’s evenrnmore difficult for sellers to have a realistic baseline for what their homesrnare worth in the current market.”</p

Buyers on the other hand, she said,rnhave shifted their mindset significantly since last year. “Buyers who have beenrnsearching for a long time may still try to win deals with aggressivernoffers.  However, new buyers in thernmarket are much less willing to chase an escalating sale price to compete withrnmultiple bids. The demand side of real estate is moving from ‘please take myrnoffer’ to ‘take it or leave it as you please.’ rnHomebuyers’ willingness to walk away from a deal that’s a bad fit isrngood for them and is ultimately healthier for the housing market.”</p

Inventories have been edging up inrnrecent months and Redfin said this is overall good for buyers who are now lessrnwilling to jump into bidding wars.  Atrnthe same time home prices and interest rates have been rising while access torncredit remains tight – all of them factors that challenge buyers.  Forty percent of Redfin agents said it was arngood time to buy, but at the same time in 2013 these responses were at 46rnpercent.  </p

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Seventy six percent of agents saidrnit was a good time to sell, down 10 points from the same time last year.  The most common challenge for sellersrnaccording to 58 percent of respondents is the unrealistic expectations theyrnhold about the value of their homes.</p

Many researchers seem to feel that youngrnpeople born between the early1980s and the early 2000s, the so-called MillennialrnGeneration, are the key to making or breaking the housing market so Redfinrnasked its agents to describe this group’s homebuying approach.  The words and phrases that came throughrnrepeatedly in the responses included “cautious,” “tech-savvy” andrn”well-informed.” Though responses varied, many said that millennial buyers wererninterested in homes with less maintenance, and were willing to sacrifice squarernfootage to be closer to work and their friends.

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