The Mood Among 2012 Home-Buyers: Feisty

On Saturday morning, Redfin surveyed 6,062 people who had toured a home with a Redfin agent since January 1, 2012. As of Wednesday at 5 p.m., 1,457 customers had responded. The survey screened out 126 people  who had no plans to buy this year, leaving 1,331 respondents.

The resulting data give us a uniquely broad, real-time portrait of this year’s home-buyers across 19 major metropolitan markets.

Their mood is, in a word, feisty. Of the people planning to buy within the next 12 months, more than half are either already under contract on a purchase or planning to be under contract within three months:

The reason these customers are buying with new vigor is that Redfin’s 2012 customers expect prices to be flat this year compared to 2011:

These customers are more optimistic about 2013, with 54% expecting prices to rise from 2012 levels, while only 10% expect a decline:

Affordability is the primary driver for today’s buyers, with 73% of buyers citing low interest rates as the reason for buying this year, and 40% citing low home prices:

And the major problem, they say, is that there aren’t enough homes to buy, with many customers either frustrated at the poor condition of bank-owned and short-sale listings, or put off by the Kafkaesque process of negotiating with a bank:

The answer choices for REO properties actually described the properties as “foreclosures and short sales,” which for the purposes of charting we shortened to “REO,” the bank term for real estate owned by the bank after a foreclosure.

The concern about inventory isn’t just a by-product of survey wording. When we asked a free-form question about what surprised our customers the most this year, more than 30% commented on low inventory. Many customers focused on how suddenly the laws of supply and demand tilted away from buyers:

• Multiple offers started appearing from the beginning of this year, January in fact, compared to November and December last year.
• Sudden demand. I think increased buyer confidence is driving prices up and even starting bidding wars.
• There’s a palpable new climate now, with seemingly many motivated buyers ready to buy. Nearly everything I see go up–good or just ok–is moving very quickly.

What our own agents have noticed is that competition has come not just to picture-perfect cottages in desirable neighborhoods but also run-of-the-mill listings. Many homes that failed to sell last fall are just now being re-listed, often only at a nominally different price — $5,000 less for example — and then going under contract the week of their debut.

Other surprises surfaced in the survey. After reading so much about the fragmentation of the American family, I was interested to see that a third of our customers were pursuing the American Dream alone:

And I was also surprised to see that only 8% of Redfin’s 2012 customers planned to sell the home in which they were currently living, which is half the number who planned to rent out a home they currently owned. When we asked where people have lived during their home search, most said they were now renting someone else’s house or apartment:

The high proportion of renters among our customers may just reflect the tendency of Redfin’s buyers to be young. But I think it also shows that in a market in which prices may be near a bottom, the people who want to buy the most are the ones who don’t also have to sell.  My guess is that there is probably a broader youth movement among American home-buyers.

Everyone else has too much baggage. For example, less than 1% of Redfin’s 2012 home-buyers had any history of a foreclosure or a short sale, even though the percentage of Americans who owe the bank more than their home is worth is closer to 25%. It will take many years for these would-be home-buyers to come back.

When they do come back, we’ll let you know. This survey will run semi-annually so we can compare the results from one period to the next; please leave a comment below if there are new questions you’d like to see us ask. We also want to survey the people who are looking at real estate from afar on our website, to compare their attitudes about the market to those of our customers.

Members of the press who would like to see the raw survey data, or view the results for one market only, can contact us at press (at) redfin (dot) com.