A recent survey conducted by Harris Interactive this week reveals a dramatic reversal in previous years' buyers' market status. A current lack of inventory is producing a surplus of offers in many markets, giving brokers and REALTORS a welcome opportunity to help sellers off the fence and into the market with confidence.
The real estate leader's spring home selling survey, conducted online among 2,058 U.S. adults (18+) in May, 2013, revealed that 33 percent of people currently searching for a home have been on the hunt for more than a year, and that the vast majority of them are willing to negotiate with sellers and make compromises to find their next home. In particular, prospective homebuyers are willing to compromise on popular amenities and their home's location.
From Florida to California, leading brokers in real estate hot spots we spoke to this week supported these findings.
"In Florida, we have been experiencing very tight inventory and in some markets less than 3 month's supply," said Rei L. Mesa, president and CEO of Prudential Florida Realty. "The lack of inventory and positive consumer confidence is driving multiple offers on the available resale inventory. The residential rental markets are at near record low vacancies with rental rates increasing. Approximately 30-40% are all cash deals
Across the country in the Bay Area, Ed Krafchow, chairman of the board for Better Homes and Gardens Real Estate Mason-McDuffie, tells a similar story.
Since the decline of the housing market in 2006, many would-be sellers refrained from putting their homes on the market due to reservations about decreases in home values, and as the real estate market recovers, the number of homes available for sale remains a challenge for the industry.
According to the survey, listed inventory in April is approximately 14 percent below one year earlier, which underscores the dramatic reversal of the previous years' buyers' market status. With an increase of buyers coming into the market, the lack of available homes for sale has presented challenges for first-time and move-up homebuyers.
Today, the recovery in housing continues to gain momentum, and with so many buyers in the market who are competing for so few available homes, it is a great time for sellers to speak with a real estate professional about the advantages of listing their home now.
"The first quarter is never the quarter to judge inventory because it's always the worst quarter
it's not our season. The best season for housing is the second and third quarter when the most activity occurs," said Smith in a May 10 interview with Lou Dobbs on Fox Business News. "That said, inventory is up about 9 percent since January so it's doing what it should be doing. And it's coming back into market as new inventory-builders are building so that's adding new inventory. Underwater equity homes now are suddenly no longer underwater in their equity or at least a high percentage of them. They're coming back into the market as new inventory and just the seasonal swing of business is coming back into the market as inventory. So inventory will correct. There's more than enough demand to meet that inventory need and price is reacting to that.
The Exit Realty spring selling survey revealed there are plenty of serious buyers in the market who are actively making offers, but due to low inventory and many houses receiving multiple offers, bidding wars are becoming more common.
According to the survey:
- 33 percent of those searching for a home say they have been at it for over a year, while 67 percent have been searching for up to a year.
- Offers are being made, but not many are accepted: 42 percent of those searching for homes have made an offer in the past six months yet only 11 percent have had their offers accepted.
Current homeowners looking to buy are more than twice as likely to have their purchase offer accepted as those who rent (15 percent vs. 6 percent). However, renters are nearly three times as likely as homeowners to report that they made an offer but couldn't agree on price (14 percent vs. 5 percent).
The recovery has transformed the mindset of many buyers and sellers who grew accustomed to the buyers' market we saw for years. Right now, we're in a situation where buyer confidence is building back up and demand is strong. As our survey indicates, sellers are now in a more favorable position to demand a close to list price sale.