Sellers are ignoring market realities for the hope of more money.
In 2014, the real estate market has been an incubator, slowly coaxing the ailing industry back into full health. However, despite the considerable gains, especially to home prices and buyer demand, there remains a hesitancy keeping sellers wary of listing their homes, according to the latest Redfin Real-Time Seller Survey.
Earlier this year, seller optimism was on the rise. In Redfin’s second quarter sellers’ survey, optimism for “now is the time sell” soared at just over 52 percent, the highest confidence in years. But over the last few months that confidence has plummeted, falling 17 percent down to a lowly 35.1 percent – the lowest levels of 2014 but still significantly higher than 2012.
Marketing is a No. 1 Concern
In Redfin’s survey, sellers provided insights that help rationalize the steep drop in seller activity.
- 59.3 percent of sellers said they’re waiting to sell their home in order to maximize the future sales price.
- Most sellers (28.1 percent) are more likely to hire an agent if they’ve worked with previously.
- The No. 1 concern from sellers (33 percent) was that agents won’t take the proper care to market their home to buyers.
Sellers Want More, Buyers Offer Less
In the second quarter of 2014, sellers told Redfin they expected to approach the market more aggressively, particularly in regards to pricing. And while persistent buyer demand and inventory shortages have allowed sellers the opportunity to increase returns, it seems most Americans are still unwilling to pay above market value.
“Sellers hoping for higher prices will face realty soon, as all signs point to lower price growth and less competition among buyers in coming months,” Nela Richardson, chief economist for Redfin, said. “Buyer demand is there, but only at the right price.”
“Right now the real estate climate is very different from this time last year,” Shawn Flynn, a Boston-based Redfin agent, said. “There are more homes for sale but fewer homes are selling, whereas last year the opposite was true. I’m starting to have conversations with sellers for the first time in two to three years about how it’s no longer a seller’s market. While some sellers are disappointed that they can no longer expect double-digit price gains, increasing inventory and stabilizing prices provide relief for everyone — buyers and sellers — that we are moving toward a much more balanced market.”
In September, homes for sale in Redfin markets went up 6.3 percent year-over-year – a result of inventories slowly starting to fill out around the nation. But even with inventory levels remaining low and demand high, some sellers are still unwilling to list their property, instead opting to wait for an undermined time in the future when their return will somehow be increased. The reality is that many sellers misunderstand the opportunity before them.
More than one-third of survey respondents (36.3 percent) admitted they’re waiting to list their home because “there are too few homes available” – a patently counterintuitive approach. From this point, inventories are only expected to grow as builders continue to satisfy demand, which is likely to further weaken sellers’ negotiating positions.
Still, while the market can no longer be categorized as a “seller’s,” the keel between buyers and sellers remains relatively even for the time being, which is allowing sellers to part with properties at close to market value. If homeowners continue holding off into the New Year, it’s possible, if not probable, their properties will remain on market for longer and the closing price will be ultimately lower.