Homebuyers More Concerned About Affordability Than the Lack of Homes for Sale
For the first time since early 2012, homebuyers said that affordability is a bigger concern for them than a lack of homes for sale. Although inventory was down 1.5 percent in November from last year, 32.6 percent of homebuyers who responded to the Redfin Real-Time Buyer Survey indicated that “affordability in the area I want to buy” was the biggest obstacle to a home purchase. Just 11.3 percent said the biggest obstacle was “not enough homes for sale.”
“If you can’t afford any of the homes for sale, it doesn’t matter how many homes are on the market,” said Leslie White, a Redfin agent in Washington, D.C. “Despite the low interest rates, prices in D.C. are so high right now, many homebuyers feel priced out of the market. They’re being forced to decide between putting their home search on hold and renting another year, buying a significantly smaller home or looking in neighborhoods farther away from the city.”
The good news for homebuyers is that the supply of homes under $300,000 is likely to increase next year as more homeowners have enough equity to sell. This year, prices for homes in the low to mid-range (generally below $310,000) increased by 12 percent, double the price increases for more expensive homes. Those increases have helped homeowners: We estimate that, in 2015, 90 percent of homeowners will owe less than 80 percent of their mortgage, which makes listing much more attractive and could result in a 5 to 7 percent increase in affordable homes for sale.
Buyers Expect Prices to Rise a Little in 2015
Redfin predicts that home prices will slowly rise in 2015, increasing by 3 percent throughout the year. The majority of respondents agreed; 58.9 percent of buyers said that home prices will “rise a little” in 2015.
Homebuyers Felt Fall Was A Better Time to Buy This Year Than Summer
The percentage of homebuyers who said now is a good time to buy improved a bit from earlier this year, increasing to 29.2 percent from 22.9 percent this summer. But this is still down from two years ago when home prices were more affordable and there were more homes for sale.
In the first quarter of 2014, we asked buyers about their home-buying plans, and 39.3 percent said they planned to buy a new home and then rent out their current home. In the fourth quarter, that number dropped slightly to 34 percent of buyers.
Short Commute and Nearby Amenities Top Priorities for Buyers
Buyers responded that they value a short commute and being close to amenities such as coffee shops (36.3 percent) and living in a highly rated school district (21.1 percent) the most when looking for homes.
Putting in the Elbow Grease
More than three-quarters of buyers (81.9 percent) said they are willing to do some work to their new home, whether they plan to do it themselves or hire professionals. Only 18.1 percent said they need a move-in ready home.
About the Survey
This survey was conducted between December 6 and 10, 2014. Survey respondents included 1,308 Redfin home-buying customers. Respondents spanned 30 markets 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, Charlotte, Dallas – Fort Worth, Fort Lauderdale, Hampton Roads, Houston, Miami, Orlando, Raleigh, San Antonio,Tampa, Washington, D.C.; Midwest: Chicago, Minneapolis; Northeast: Boston, Hudson Valley, Long Island, Philadelphia.