Second homes are providing a surge of new listings, and first-time homebuyers are back this spring, according to the latest survey from Bright MLS, which also unearthed some potentially important trends across its large mid-Atlantic footprint as real estate professionals across the country are still parsing out the 2023 market.
Dr. Lisa Sturtevant, Bright’s chief economist, was careful to point out that the results aren’t necessarily applicable to the entire country. But the data, encompassing rural, urban and suburban areas across six states, continues to skew from expectations.
“This paradoxically competitive market is kind of happening across the mid-Atlantic,” she says. “We’re hearing so much about this slowing housing market, the sluggish market—for individuals, it seems very competitive still.”
Some big notable datapoints, gleaned from the survey of almost 2,000 agents in April: first-time buyers made up almost half of all buyers, and nearly a sixth of listings were investment properties or second homes.
The many questions about whether buyers would return to the market may be getting some answers also, as the survey found that people may not be as influenced by mortgage rates as many pundits have suggested.
“Rates of course matter—for some people it’s make or break,” Sturtevant says. “But the all-cash sales and the fact that people are moving with a little more equity…I found that really interesting.”
A sharp ramp-up in mortgage rates through the fall was largely blamed for an overall cratering of home sales in the second half of 2022. Brokers also singled out rates as the main factor discouraging consumers.
But 2023 is a new year, and Sturtevant says it is possible that people have accepted a new normal after years of historically deflated rates. Only about one-fourth of buyers (23.9%) said that mortgage rates were a consideration at all in their decision to buy, with a miniscule 4.1% saying they were the primary factor.
“I think there has been a lot of internalizing of the mortgage rates at 6.5%,” Sturtevant explains. “Right now there seems to be a lot of acceptance, that this is where rates are for now.”
The huge proportion of first-time buyers—also tracked in last month’s survey—was another surprise. Sturtevant notes that while these buyers are having to make more offers and are paying more for houses, the fact that they are coming back to the market is surprising and potentially very interesting.
“We’ll keep an eye on it,” she says. “I’m a little surprised, to be perfectly frank. Maybe next month I’ll ask a specific question about the mindset of the first-time buyer, and we can figure out who these people are.”
On the sell side, agents themselves worried that there would be a lack of available homes on the market—a problem that started well before the pandemic but has seemingly persisted through it. More than half of agents predicted that seller activity would be “low” or “very low” over the next three months, with the same proportion anticipating “high” to “very high” buyer activity.
This scenario could potentially create similar conditions to the 2020-21 market, with bidding wars and spiraling prices. Sturtevant says it is too early to say on this front, but that there are no real indications of major relief on the inventory side.
“I think we’re going to see a little bit freeing up, but it’s going to be a really low inventory year regardless,” she predicts.
That means the few sources of new inventory become all the more important. In a market like Bright’s, coastal areas and so-called “zoom towns” have proven important for creating new listings as some people end up moving back from their pandemic refuges, or offloading vacation homes.
“Some of those sales are ramping up for the summer season, but we’re also seeing it in some of the more distant markets, where that might be a little bit of buyer’s remorse,” Sturtevant says.
Another source of listings that provided a surprisingly large proportion of homes—both this month and in the last survey—was retirements and owners who passed away. Sturtevant says it remains unclear whether this is cyclical, a statistical aberration or the result of an aging population, but it is something to keep an eye on.
“We may see that more and more of inventory on the market is going to come from folks retiring, or moving into assisted living, or the owner passing away,” Sturtevant reflects. “I think that’s going to be a larger than normal share of inventory over the next few years.”
