Real estate markets move in Spring 2022 along with changing macro trends. The imbalance between supply and demand is still a dominant feature of the landscape, pay price list to new heights. At the same time, higher inflation coupled with a change in monetary policy has led to a more than 200 basis point increase in mortgage rates over the past four months. In the process, many buyers are priced out of the market. while, home sellerswho have been in the driving seat for the past year and a half, are finding more competition from other sellers, as the number of new listings is growing higher compared to last year.
Most importantly, a notable share of sellers in 2022 are trying to buy their next home at the same time, adding complexity to an already difficult task. While sellers stand ready to pull out record-high equity when they close their homes, they also face higher prices and interest rates on their next home. While some may face the possibility of being constrained by a low mortgage rate, other homeowners may find a suitable solution in Get away from a high-cost city Towards an affordable mid-size site.
To better understand this year’s challenges for sellers who are also looking to buy their next home, we surveyed homeowners across the country in partnership with HarrisX. The data highlights that many sellers and buyers today are younger, looking for a change due to the growing number of families and the search for affordability.
Who are the sellers and buyers of this spring?
Of all homeowners planning to sell this year, 72% are also planning to buy their next home. The largest demographic group of active sellers and buyers in this year’s markets are millennials (47%). Buying sellers in the Gen Z group (25%) are the second largest group, followed by Gen X (15%) and Baby Boomers (12%).
Reflecting broader activity patterns, the largest shares of sellers and buyers are located in the southern and western regions of the country, making up 69% of the total. Both the Northeast and Midwest were home to 15% of sellers and buyers.
Similarly, most buyers-sellers are concentrated in urban areas, with 42% living in urban areas and 42% in suburbs. Only 15% of sellers willing to buy live in a rural area.
What are the key issues for sellers this spring?
With rising prices and mortgage rates adding to the financial challenges of many sellers looking to shift gains into their new homes, we asked homeowners how they plan to deal with the shift. 46 percent of them plan to buy a home to move into first, and then put their current home up for sale. This choice appears to provide the most flexibility for homeowners, especially given the limited inventory conditions, which have left many successful sellers in limbo after their homes closed and were unable to find a replacement. At the same time, 44% of homeowners plan to buy and sell at the same time. Finally, one in ten homeowners plans to sell their property and live elsewhere while looking for an alternative.
With consumer inflation up 8.5% from last year, home prices 14% above last year levels and mortgage rates that made the monthly payment 50% higher than they were in 2021, affordability is a major concern for landlords. Homes for this year who are planning this. sell and buy. When we asked Americans what price they plan to sell their current home at, 49% indicated $500,000 or less, with 15% aiming for $200,000 or less. The distribution of selling prices is an encouraging sign for many buyers who have found the housing market in the last year to be very frustrated due to the high prices. The increase in the number of affordable homes for sale will be welcome news for the markets. Interestingly, 32% of homeowners plan to sell their homes in the $500,000-$1,000,000 swap range, and 18% are seeking a sale price above the $1,000,000 mark.
Highlighting the topic of affordability, this year’s sellers are looking to buy their next homes at more affordable rates, with 53% aiming to buy property at $500,000 or less, and 17% of those looking for homes in “$200,000.” or lower” price category. A slightly smaller share of sellers are seeking home swaps ($500,000-$1,000,000 class) – 29% compared to 32% planning to sell in the same segment.
The search for more affordable housing is outlined in a follow-up question, in which we asked homeowners who plan to buy and sell what their new home owns “less than” their current home. Low asking price and fewer upgrades topped the list, followed by exterior features, size, number of bedrooms and space.
At the same time, sellers and buyers are looking for more certain features in their next homes. At the top, they want bigger homes on larger lots, which is a clear indication that buyers today are expecting more from their homes, especially as life stage needs change. Besides more space, sellers and buyers are looking for more exterior features in their next door home. Not surprisingly, the notable share wanted more bedrooms and bathrooms.
How are market conditions for sellers this spring?
Realizing that market conditions remain tilted in their favour, a significant share of homeowners planning to sell this spring expect to dictate the terms of the deal. Nearly a third plan to order more than they think their home is worth, while 27% intend to request a quick closing. Roughly a quarter don’t plan to accept offers below the asking price, and 24% don’t plan to pay for any repairs or improvements to their home.
In a sign that financial pressures and rapidly changing interest rates are affecting housing markets, sellers and buyers are concerned about managing financial logistics for both operations (36%), along with home prices (32%), and rising mortgage rates (24%). About a third of homeowners planning to buy or sell are concerned about the logistics of moving in during the process of vacating a home and taking another home. Other concerns are the final price of the home they’re selling (27%), finding a home in their budget (26%), financial transitions (25%), and finding the right agent to work with (23%).
When navigating the fast-moving currents in today’s real estate markets, sellers and buyers consider many options to facilitate their transactions. At the top of the list, this subgroup of homeowners is looking for a single agent to handle both processes (37%). The second option in the ranking is to work with an online company that offers instant cash offers. The third option is to buy a home with the help of a company that allows homeowners to move in and pay a fee or rent until their home is sold.
What are sellers looking for in their next homes?
Affordability is an important consideration for buyers in 2022, and that includes homeowners selling their current homes and looking for their next home. With at least one home experience under their belt, we asked sellers and buyers what are the most important features of their next homes.
Surprisingly, and likely reflecting pandemic-induced shifts in preferences, pet space was ranked as the number one feature. While pet ownership has been on the rise over the past decade, quarantines and social distancing restrictions have precipitated this trend, which is now reflected in what people prioritize in their home searches. In second place, sellers and buyers want large backyards in their neighboring homes, which is another aspect that has grown in importance over the past couple of years. Third place is occupied by several features, which have been at the top of buyers’ lists for a few years: updated kitchens, outdoor living areas, quiet locations and garages. These features highlight the renewable value Americans place on home jobs.
A search for reasonable prices, facilities, and features has rearranged site preferences. After a decade of urban renewal, families are looking for different traits. While 17% of sellers and buyers are looking for their next home in the same neighborhood, 37% are looking for homes in other parts of their city. An additional 23% of these homeowners searching for their next home are searching in nearby cities and towns, and 13% searching in other areas within the same state. Similar to other sources of immigration patterns, 9% of sellers and buyers are searching for their next home in locations across state lines.
We asked homeowners looking for their next home outside of their current city what motivates them to relocate. The lower cost of housing was the primary driver, followed by the desire for a warmer climate. The data highlights the popularity of housing markets across the Sunbelt, which have seen an influx of new residents over the past two years, along with active and growing property markets. Getting to the outdoors and getting close to family and friends were also important reasons to consider getting a home in another city.
Why are sellers also looking to buy?
Homeowners planning to sell their current home while buying their next home list several reasons for their decision. High on the list was the fact that many people are experiencing growing families, whether they move in with a partner, have children, or take care of parents. Connected to this, sellers and buyers need more space that their current home does not provide. Another close reason is that these homeowners want to build stock.
While practical considerations serve as the basis for changing homes, economic changes and market changes also play an important role in homeowners’ decisions. Given rising home prices and interest rates, it’s no surprise that 63% of buyers and sellers are concerned about being priced off-market.
These concerns lead some homeowners to speculate about their plan to buy a home after their current home is sold. When we asked about the most pressing market conditions, 39% of inflation listed on the top, 36% cited higher home prices, and another 36% cited higher gas prices. Rising interest rates were also worrisome, as was the possibility of another recession, along with the political landscape.
Even with concerns present, 19% of sellers were already in the process of placing bids on their next home. Another 11% were planning to buy in the next 30 days, while 26% were looking into the next 1-3 months. In all, 73% of sellers plan to purchase another home within the next six months.
This year’s housing markets remain crippled by insufficient supply exacerbated by the forces of inflation and rising mortgage rates. The silver lining to pull of tiered affordability is that an increasing number of homeowners are planning to list their properties for sale, providing reprieve from a shortfall. At the same time, many of these homeowners are working through the same challenges as other buyers, searching for affordable housing options amid a scene of rising prices and financing costs.
This report is based on data from a US online survey conducted April 15-18 among 3,212 adults by HarrisX. The margin of sampling error in this survey is plus or minus 1.7 percentage points. The results reflect a nationally representative sample of adults in the United States. Results were age-weighted by gender, region, race/ethnicity, and income when necessary to align with their actual proportions in the population.