After sitting on the sidelines as low mortgage rates fueled homebuyer demand and listing price growth throughout the pandemic, prospective sellers are eager to enter the housing market within the next six months, according to a new Realtor.com survey. Compared to the spring (76%), more of today's prospective sellers (93%) have already taken steps toward listing their home, including working with an agent, researching the value of their home and others in their neighborhood, making repairs on their home or decluttering.
The survey of 2,583 consumers conducted online by HarrisX in September-October 2021, found 65 percent of homeowners expect to enter the market within six months. Nineteen percent said they have already listed their home.
Joanne Fraser, president of the Silicon Valley Association of Realtors, says sellers still have an edge in the marketplace. "Though price growth is expected to moderate as interest rates are expected to rise, it is still a sellers' market because of the limited inventory of homes."
Economists anticipate more inventory in the coming months from new housing construction. With the end of the mortgage forbearance program, they also expect mortgage delinquencies will cause a number of homeowners to sell.
"We may see some foreclosures, but that number is not expected to be as high as during the Great Recession, and because of the strong demand for homes, especially in our region, those houses are not expected to stay long in the market," says Fraser.
According to the Realtor.com survey, top reasons for selling are influenced by the pandemic.Compared to the spring (15%), nearly twice as many prospective sellers (33%) have realized they want different home features after spending more time at home. Family considerations are a top reason behind homeowner decisions to enter the market, with 37 percent of prospective sellers saying their home no longer meets their family's needs and 32 percent saying they want to move closer to friends and family. The rise in remote work is also a key driver as 23 percent of sellers said they are looking for a home office and 19 percent said they no longer need to live near their workplace, up from 6 percent in March.
The Realtor.com survey also found sellers are eager to take advantage of their edge in the current market. Compared to the spring, more of today's prospective sellers anticipate buyers will compete in bidding wars, offer above asking, forgo contingencies like inspections and appraisals and more. Over one-third expect offers above asking price, but those looking to close quickly may be more willing to compromise than in the spring. More than three-quarters (77%) say they would be willing to accept a lower offer to close quickly.
These survey findings align with observations made by National Association of Realtors chief economist Lawrence Yun upon the recent release of the NAR's pending sales report. Pending home sales increased in all four major regions in October, rebounding after a decline in the previous month. The Pending Home Sales Index shows contract signings increased 7.5 percent to 125.2 in October from September. An index of 100 is equal to the level of contract activity in 2001.
"Motivated by fast-rising rents and the anticipated increase in mortgage rates, consumers that are on strong financial footing are signing contracts to purchase a home sooner rather than later," said Yun. "This solid buying is a testament to demand still being relatively high, as it is occurring during a time when inventory is still markedly low."
Yun added, "The notable gain in October assures that total existing-home sales in 2021 will exceed six million, which will shape up to be the best performance in 15 years."
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
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