Despite forecasts that prices will increase less in 2013 than this
year, buyers are more concerned by rising prices than the overall
economy. Thirty-three percent of buyers listed rising prices as a major
concern in the fourth quarter, up from just 23 percent in the third
quarter. Meanwhile, 22 percent said they were concerned with a weak
economy, down from 27 percent in the third quarter, according to the
Redfin Real-Time Homebuyer Survey. From November 30 to December 2, 2012, Redfin surveyed 1,084 active homebuyers who had toured a home with a Redfin agent since August 14.
More Than 70 percent of buyers believe prices will rise next year in
their markets. The number of buyers who believe prices are rising shot
up even higher in the fourth quarter, although most still expect gains
to be modest. Ten percent of respondents expect home prices in their
area to “rise a lot” over the next twelve months, the same as last
quarter; 61 percent expect prices to “rise a little” an increase of ten
percentage points over last quarter. Twenty-one percent expect prices to
“stay the same,” 6 percent expect prices to “drop a little,” and less
than 1 percent expect prices to “drop a lot.”
A growing number of buyers are planning to buy in order to get out in
front of rising prices. Thirty-three percent of respondents indicated
rising prices as a motivation for buying now, up from 29 percent in the
third quarter and just 19 percent in the first quarter. Not
surprisingly, a decreasing number of buyers cited “low home prices” as
their reason for buying-just 28 percent in this quarter’s survey, down
from 33 percent in the third quarter and 40 percent in the first
quarter.
More than half (59 percent) of buyers listed low inventory as their
top concern with buying now, consistent with last quarter’s rate. When
we asked buyers how low inventory was affecting their home search,
nearly half (46 percent) indicated that they have expanded their search
to include new areas that they hadn’t previously been considering, while
38% indicated that they would be taking a break until more listings
come on the market.
In the nine months between Redfin’s first quarter survey and the
fourth quarter survey, the percentage of buyers who were also potential
home sellers roughly doubled, from 8 percent to 16 percent; after years
of rising, the percentage of first-time home-buyers actually decreased
from 48 percent to 37 percent. Over that same time, buyers who believe
prices will rise over the next 12 months has gone from one in three (34
percent), a minority, to an overwhelming majority, nearly 3 in 4 (71
percent); the number that considered delaying a purchase to see if
prices dropped further declined from nearly 1 in 3 (29 percent) to one
in 20.
For homebuyers who are not first-timers, we asked if they’re planning
to buy a home that is bigger, smaller, or the same size as their
current home. The most common response was “much bigger,” at 49 percent.
Only 9.6 percent intend to buy a home that is much smaller, while the
remaining 41 percent are planning to buy a home that’s the same size but
is nicer, more affordable, or in a different location.
Most homebuyers are not very concerned about the Fiscal Cliff and
possible changes to the Mortgage Interest Deduction. Although the
possible consequences of some of the proposed changes may be large for
certain people, only about 5 percent of buyers are seriously concerned
and only 23 percent are being more cautious in their home search while
they wait to see how things pan out.
For more information, visit www.realestateeconomywatch.com