As a sign that the housing market is returning to normal, sellers are more likely to be selling their homes due to life-cycle motivators like upgrading or downsizing rather than securing a home before interest rates are adjusted by the Federal Reserve.
A Redfin survey of 730 current and potential sellers showed that last year, 59 percent of sellers said that they are buying a home before interest rates or prices rise as the top reason to sell.
This year, in October, that number reached 16 percent, revealing that historically low interest rates are not a top concern for buyers, the survey showed.
Other worries consisted of wanting a larger or nicer home (29 percent), relocating to a new city (27 percent), and wanting a smaller home (21 percent).
“This is a big change in sentiment from our October 2014 seller survey, when concern that mortgage rates and home prices would soon rise was home-sellers’ most common motivation,” Redfin explained.
“Seller optimism is flying high right now,” said Nela Richardson, Redfin Chief Economist. “But buyers are more grounded now and pricing a home too high is risky. More sellers are having to drop their initial asking price this fall than a year ago.”
The survey also found that after the life-cycle reasons listed by consumers, one in five of respondents said that their reason for selling is to pull out the profit they have made on their home.
Sellers are much more confident that the market is in their favor compared to last year, Redfin reported. Of those surveyed, 60 percent indicated that they have the power in the housing market, up from 46 percent last year. In terms of home prices, 63 percent forecast that they will go up in 2016. Meanwhile, among respondents that are waiting to sell, 27 percent are holding off on listing their home for sale because they expect prices to go up.
“Many sellers are coming to the market with an expectation that their home will sell for the same amount their neighbor’s did three months ago, but that’s no longer an accurate reflection of the market,” said Scott Driscoll, Boston Redfin agent. “Even more than normal for this time of year, I’m frequently reining in seller’s expectations, advising them to consider the very latest data on nearby sales and homebuyer demand.”
Seller also had concerns about housing market conditions, with 32 percent of those surveyed indicating that general economic conditions might discourage buyers, and 28 percent said that they might not fins another home they want and prices may fall before they sell.
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