A recent survey found that most successful homebuyers aren't deterred by interest rates, but high interest rates are the biggest concern for those who have put off buying.
Key Point:
A Bright MLS survey of member agents found that over 68% of agents have buyer clients who have stopped searching for a home. These buyers were frustrated by multiple offers, high prices and high interest rates. Sellers are generally happy with the price they were offered, but many are willing to make concessions.
Summer is typically the peak season for home sales, but with prices continuing to reach record highs and mortgage rates stagnating around 7 percent, buyer and seller activity is low to average, real estate agents reported in a recent Bright MLS survey.
The survey included responses from more than 1,000 real estate agents in Bright’s Mid-Atlantic region, providing an overview of real estate consumers and their motivations, as well as agent expectations for future market activity.
Fewer buyers are giving up…
According to the survey, 68.4% of respondents had buyer clients who had stopped searching for a home due to market conditions.
While that figure is high, it's down about 6 percentage points from the previous month, suggesting more people are continuing their home search.
…But many buyers remain disappointed
Some potential buyers are rushing to make a purchase, but others have put their purchase plans on hold due to market dissatisfaction and financial barriers.
More than half of respondents said their clients were frustrated by offers that didn't go through or were competing with all-cash offers, and just under half said buyers simply couldn't find the right home. While housing inventory has improved since last year (the most recent data from the NAR showed that in May, home inventory reached 3.7 months' worth), it's still below what would be considered a balanced market.
But buyers' biggest concern was their wallets: Some 61% of real estate agents have had clients who stopped looking for homes because prices were too high, and 57% said rising mortgage rates were a factor.
Mid-Atlantic buyers aren't the only ones feeling pessimistic about the home-buying outlook: Fannie Mae's Home Buying Sentiment Index, a national monthly gauge of consumer attitudes, hit an all-time low in May, and 86% of consumers say now is a bad time to buy a home.
Mortgage rates are a concern, but not necessarily an obstacle
High mortgage interest rates have been a major issue for buyers who have given up on their search, but those who have been successful in purchasing have generally not been deterred by current interest rates.
About a quarter of survey respondents said mortgage rates are irrelevant because buyers are paying with cash, while half said their customers plan to buy now regardless of interest rates.
Only 3.5% of real estate agents said buyers time their home purchases to coincide with a specific mortgage interest rate.
Sellers happy with the selling price
While rising home prices have made it tough for buyers, the vast majority of real estate agents surveyed (86%) said they were able to help sellers get the price they wanted.
Real estate agents say there are many reasons why sellers move, but the most common motivator is family reasons.
More than a third of agents said their seller clients offered buyers credits for repairs, 27% of agents negotiated rent-backs with sellers and 20% covered buyer closing costs.
The market is likely to decline in the future
Real estate agents who have been waiting for the market to pick up may have to wait a little longer: According to a Bright MLS survey, nearly half of agents surveyed expect “average” levels of activity from both buyers and sellers over the next three months.
In May, about 40% of real estate agents expected buyer activity to increase in the coming months, but that figure fell to about 32% in June.
However, compared to the sellers' side, the buyers' side is more vibrant, with only 9% of agents predicting increased sellers' side activity in the next three months.