For the latest Redfin Real-Time Home-Buyer Tracker, we surveyed more than 1,100 active home-buyers who have recently toured homes with Redfin, in order to get their pulse on the market. With inventory at record lows across the country and home prices on the rise in almost every market, buyer frustration shot through the roof this quarter.
Home-buyers surveyed by Redfin are:
- Anticipating continued price increases: Seventy-nine percent of buyers who responded to our survey now believe that home prices will increase in their neighborhood in the next twelve months, up from 71% last quarter. Meanwhile, the share of buyers who believe prices will rise “a lot” shot up from just 10% last quarter to 22% in the first quarter.
- Now believe it is a better time to sell than it is to buy: Just 40% of buyers believe now is a good time to buy in their neighborhood, while 48% believe it is a good time to sell. Last quarter the results were flipped: 48% believed it was a good time to buy, while just 27% believed it was a good time to sell.
- Are most concerned by low inventory and rising prices: Sixty-six percent of buyers listed low inventory as a major concern in the first quarter, up from 59% in the fourth quarter. Forty percent listed rising prices as a concern, up from 33% last quarter.
- Driven into the market by rising prices: Low interest rates was still the top response (58%) when we asked buyers why they plan to buy now, but rising prices shot up from 33% in the fourth quarter to 40% in the first quarter.
The overwhelming themes buyers shared with us this quarter were low inventory and rising prices. When we asked “What has surprised you most about your local real estate market,” 38% of the people mentioned the lack of inventory while 31% mentioned rising prices. In response to these frustrations, more buyers are increasing their budgets and expanding their search to new areas.
About the Survey
From February 22 through 25, 2013, we surveyed 1,119 active homebuyers who had toured a home with a Redfin agent since November 29, 2012.
Respondents came from across 19 metropolitan markets in the U.S.: Atlanta, Austin, Baltimore, Boston, Charlotte, Chicago, Dallas, Denver, Los Angeles, New York, Orange County, Phoenix, Portland, Riverside / San Bernardino, Sacramento, San Diego, San Francisco, Seattle, and Washington DC.
Data and charts are below. If you’d like data segmented other customer demographics, please contact press (at) redfin (dot) com. If there are questions you’d like us to include in the survey next time, please just leave a comment below.
The Q1 2013 Redfin Real-Time Home-Buyer Survey
Buyer Expectations that Prices will “Rise a Lot” Doubles
The number of buyers who believe prices will increase in the next year shot up even higher in the first quarter, while the share of buyers expecting big price gains dramatically increased. Twenty-two percent of respondents expect home prices in their area to “rise a lot” over the next twelve months, up from just 10% last quarter; 57% expect prices to “rise a little” a decrease of four percentage points over last quarter. Thirteen percent expect prices to “stay the same,” 5 percent expect prices to “drop a little,” and less than 1 percent expect prices to “drop a lot.” Click here for the full breakdown of all answers.
Buyers Believe Now is A Good Time… to Sell
For the first time since we began conducting this survey, more buyers believe that now is a good time to sell than believe it is a good time to buy. Just 40% of respondents indicated that they believe now is a good time to buy a home in their neighborhood, down from 48% last quarter. At the same time, 48% of respondents now believe it is a good time to sell a home in their neighborhood, up from just 27% last quarter. This dramatic flip is no doubt a result of the increasingly tight inventory situation around the country that we have been chronicling since the start of the year.
Rising Prices Drives More Buyers Into the Market
Low interest rates was still the top factor in why buyers want to buy now, selected by 58% of respondents, but rising prices shot up seven percentage points from 33% in the fourth quarter to 40% in the first quarter–the same share that “low home prices” was at when we launched this survey a year ago. Click here for the full breakdown of all answers.
Low Inventory and Rising Prices Top Buyer Concerns
When asked about your “major concerns with buying a home this year,” the most common response was yet again “not enough good homes for sale,” which shot up from 59% in the fourth quarter to 66% in the first quarter. “General economic concerns” fell again this quarter, dropping to just 19%, while “prices are increasing in my area,” shot up another seven percentage points to 40% in the fourth quarter. Click here for the full breakdown of all answers.
Low Inventory Forcing Expanded Searches and Bigger Budgets
In response to the one-two punch of rising prices and tight inventory, more buyers are expanding their home search to new areas they haven’t considered before. Fifty-one percent of respondents said they were “looking in new areas,” up from 46% in the fourth quarter. More buyers are increasing their budgets, as well. Thirty-four percent of respondents said they were “ready to pay more,” up from 26% last quarter. The percentage of buyers who are “taking a break” dropped this quarter to 32%, down 6 percentage points from last quarter.
With February not even behind us yet, the tightness we’re seeing in home inventory and the frequency of multiple offers is more typical of a spring market. Buyers are feeling the pinch and few are backing down. With expectations set for even more price increases in the coming year, anyone thinking of getting into the market as a buyer in the coming months should expect to encounter an intense market, where sellers have a clear upper hand.