Move-up Buyer Confidence on the Rise

The confidence of existing homeowners is rising, and it could mean more starter-home inventory will hit the market in the near future, according to an analysis released by ValueInsured on Thursday.

ValueInsured’s Housing Confidence Index shows existing homeowners who are considering upgrading to a larger one have a confidence level of 75 out of 100 in their potential purchase. That’s higher than the confidence levels of first-time buyers, non-homeowners, and all Americans as a whole.

“Existing homeowners are also the only group that reported an increase in housing confidence since January 2017,” ValueInsured reported. “This comes as no surprise as rising interest rates, higher home prices, and what has been dubbed ‘the strongest seller's market ever’ have most benefitted existing homeowners in the current housing climate.”

But given homeowners’ high levels of confidence, inventory is still strapped, and there just aren’t enough starter homes on the market. It will take getting these owners to start selling in order to alleviate the market’s inventory problem, ValueInsured says.

“It has been reported that home sales this Spring has been slowed by low inventory; and one key reason for the shortage is would-be sellers holding onto their current homes, concerned that they may not be able to find desirable homes to upgrade to,” ValueInsured reported. “In other words, it is not far-fetched to say that not only are repeat buyers responsible for two-thirds of all home sales, they have a hand in helping close the other one-third as well.”

Ultimate, ValueInsured says, it’s expected interest rate hikes and timing that are keeping people from selling. According to the site’s recent Modern Homebuyer Survey, 76 percent of homeowners believe interest rates will continue to rise this year, and another 71 percent say “the era of affordable mortgages are coming to an end.”

“Given the historically low levels of interest rates and record high refinancing applications in the past four years, many of these potential upgrade buyers likely have recently refinanced and are hesitant to give up their existing low rate mortgage,” ValueInsured reported.

The survey also showed that 56 percent of homeowners think prices would come down if they bought a new home now, and half think six months from now is a better time to sell.