Real estate consumers remain optimistic about housing and its long-term prospects yet are hesitant to list their homes in a market largely favoring sellers. This news comes from a recent Berkshire Hathaway HomeServices’ Homeowner Sentiment Survey.
“While all real estate is local, homeowners told us a number of factors give them pause as they think about listing today,” says Gino Blefari, CEO of HSF Affiliates. “From a broad perspective, many are looking for continued home-price improvement and a stronger U.S. economy. Personally, they want more confidence they can secure a new mortgage and then find the right new property.”
U.S. real estate has moved forward since the “Great Recession,” though its recovery has been tempered by various market conditions. For example, strict mortgage-qualification guidelines continue to stem the flow of consumers to real estate while homebuilders have not kept pace with growing demand and household formation. Concurrently, much of the glut of homes generated in the downturn – “Shadow Inventory” – was gobbled up by investors who now rent the properties. These factors and others have led to a low supply of homes, which in turn has intensified competition for existing properties and driven up home prices in many markets.
Adding to the challenge for real estate consumers and the industry is that many homeowners are simply not listing their homes. Why?
“People considering selling their homes seem overwhelmed by local-market conditions and the decisions and improvements that must be made for their homes in order to list,” says Blefari. “For agents, this is an ideal opportunity to engage with consumers and educate them on the real estate process and today’s opportunities.”
Overall, a significant majority of Homeowner Sentiment Survey respondents (71 percent) says U.S. real estate is heading in the right direction, though this number is down from first quarter results. Yet among contemplators – those who are considering selling their homes but have not yet listed – 73 percent point to home prices that have not recovered to pre-recession levels, and 61 percent say uneasiness about the U.S. economy has kept them on the sidelines to this point.
In general, respondents says credit-score impairment caused during the downturn, stringent lending guidelines and the competitive landscape for homes – in particular, the challenge facing first-time buyers in competing with all-cash, equity-flush and international buyers – as top concerns today. Among current homeowners, 68 percent says underwater mortgages remain a hurdle.
Ironically, less than half of all respondents identified low inventory as a market challenge and only a small minority – 12 percent of prospective homeowners and 6 percent of current homeowners – described housing inventory as “decreasing.” Still, the most common barriers cited by contemplators for not yet listing reflect the inventory shortfall, including “Waiting for the right opportunity” and “Haven’t found my ideal home yet.”
“This is a classic case of supply and demand,” says Berkshire Hathaway HomeServices President Stephen Phillips. “The low supply of homes in many markets creates a strong opportunity for those able and willing to list their properties. Good homes priced correctly are selling quickly in many cases.”
Opportunity also exists for buyers as mortgage rates remain near historic lows. And, as more homes come on the market, balance will return to U.S. real estate, Phillips added.
“Education is essential in today’s market,” explains Blefari, noting that 55 percent of contemplators says they’d be more likely to list if they had additional information on the home-selling process. “The stage is set for real estate professionals to connect with consumers, learn their needs and concerns and determine the best way for sellers and buyers to capitalize on the opportunities that exist today.”
For more information, visit http://www.berkshirehathawayhs.com/.
