Mike Sorohan | November 27, 2017
It's a seller's market thanks to low inventory, but ValueInsured, Dallas, said many would-be sellers are hesitating to sell because of the high price they'd have to pay for their next home.
The company's quarterly Modern Homebuyer Survey reported 79 percent of homeowners believe now is a good time to sell a home. Two-thirds of homeowners are interested in actually selling their home "in the near future," up 8 percentage points from last quarter.
But many aren't selling, said ValueInsured CEO Joe Melendez. "Homeowners in many cases are eager to sell but don't want to become buyers," he said. "These homeowners have experienced a lot of home value volatility and see more uncertainties looming--tax reform, for example. By hesitating, these homeowners are actually controlling the market on both sides. Reassuring these individuals is the key to unlocking inventory."
The survey said of those homeowners who are interested in selling their home either to upgrade or downsize, 72 percent say they are concerned with timing the real estate market; 63 percent say now is a good time for them to sell, but not to buy, due to high home prices; and 61 percent are "waiting until prices to buy are better to make a move."
The survey also noted while many have speculated that low refinance rates are keeping homeowners from pulling the trigger to sell, this factor is less consequential than expected. Only 18 percent of homeowners looking to sell say they haven't because they don't want to give up their current low mortgage payment. On the other hand, more potential home sellers (26 percent) say they second-guess their desire to sell because they don't want to pay brokers fees, new mortgage closing costs, capital gains taxes and other associated expenses as it would weaken their buying power for their next home.
Home-buying hesitations mirror overall housing confidence, which is down this quarter among Americans overall and homeowners. The ValueInsured Housing Confidence Index recorded a score of 67.7 on a 100-point scale, down 1 percentage point since August. Millennial homeowners' housing confidence dropped by 3.7 percentage points this quarter to 77.7--a 7.7 percentage point drop and the lowest score since the quarterly survey began in spring 2016.
Overall, 57 percent of all homeowners surveyed who are interested in selling and moving believe they will move from their current home within the next three years, though some say they may rent out their home or pass it on to family instead of selling it. And among millennial homeowners, more than a third (35 percent) say they're likely to change jobs soon, so they are waiting to see where that move takes them before selling to upgrade.
"Eventually, younger people move for jobs and empty nesters need to leave their five-bedroom homes," Melendez said.