Confusion and lack of clarity as a housing market shifts are often par for the course as consumers try to interpret the signs.
According to a new Zillow survey of real estate agents, that also appears to be happening in today’s market.
A recent survey released by the Seattle-based company found that the most common misconception among would-be buyers is that home prices will crash, while sellers still expect bidding wars and quick sales like last year.
Nearly half of agents (46%) say the biggest misconception among aspiring homebuyers is that home prices will fall significantly. More than a third of agents (35%) say prospective buyers mistakenly think they should wait for high mortgage rates to come down.
Zillow explained in the report that a rapid drop in home values is unlikely. Based on the company’s home value forecast, Zillow expects values to flatten over the next year, with prices increasing by 1.3% by September 2023.
According to the report, fewer new listings will keep pushing home prices higher—albeit slower than in years past. Mortgage rates are another factor, as Zillow cited Barron’s reports of housing economists anticipating further increases instead of declines as inflation persists.
Key highlights:
- The top misconception among aspiring homebuyers is that home prices will fall significantly.
- Despite the cooling market, agents overwhelmingly say sellers continue to expect bidding wars, offers above asking price and quick sales.
- The survey finds that first-time homebuyers should line up financing first and separate their wants from their needs before shopping for a home.
- Nearly three in four agents say pricing a home correctly is the most important seller strategy (73%).
- Twenty-eight percent of respondents said the biggest mistake first-time homebuyers make is failing to separate their wants from their needs.
- Nearly three in five agents say buyers are taking more time to consider a home and making offers below list price more often.
- More than 40% of surveyed agents say today’s buyers include more contingencies in their offers, like inspections and appraisal contingencies.
- Eighty-one percent of agents say sellers expect multiple offers on their home, while 79% expect a price above market value and a quick sale.
- Seventy-four percent of sellers think there is no need to cut their prices.
The takeaway:
“Buyers may think it’s better to wait out the market, but in reality, there is more opportunity in this market than I have seen in the past five years if buyers approach real estate as a long-term investment,” said Michael Perry, an agent who leads The Perry Group in Salt Lake City, Utah. “If prices or mortgage rates take a meaningful dip, all those sidelined buyers will likely come rushing back to the market, driving up competition and prices. If a buyer can purchase today, they have bargaining power, more options and more time to find the right home instead of being rushed into a purchase they might regret.”
“Sellers can no longer put a for-sale sign outside their home and expect the offers to pour in,” said Koby Sway, an agent with The Briley Team in Omaha, Nebraska. “They have to roll up their sleeves and make necessary repairs and home improvements before listing their home for sale. And it’s more important than ever to get the pricing right when competing against other sellers for a smaller pool of buyers.”
