Why Sellers Hesitate to Sell Their Home
Recently, I was looking at some information over at Keeping Current Matters that I thought you might find helpful.
According to the article, which you can read here, 23% of homeowners questioned in a survey said they have considered selling their home, but haven't yet put it up for sale.
Berkshire Hathaway Home Services released their press release that details the results of its second Homeowner Sentiment Survey, indicating that real estate consumers remain optimistic about housing and its long-term prospects yet are hesitant to list their homes in a market largely favoring sellers.
Interviews with 2,557 respondents were conducted online by Edelman Berland in July 2015. The respondents captured were either current homeowners (individuals who currently own a home as a primary residence) or prospective homeowners (individuals who are looking to buy a home within the next six months). The margin of error is +/-1.9% for all respondents.
In general, respondents said credit-score impairment caused during the downturn, stringent lending guidelines --more-- 2-2-2 and the competitive landscape for homes – in particular, the challenge facing first-time buyers in competing with all-cash, equity-flush and international buyers – as top concerns today. Among current homeowners, 68% said underwater mortgages remain a hurdle.
As stated in the press release, U.S. real estate has moved forward since the “Great Recession,” though its recovery has been tempered by various market conditions. For example, strict mortgage-qualification guidelines continue to stem the flow of consumers to real estate while home builders have not kept pace with growing demand and household formation.
Concurrently, much of the glut of homes generated in the downturn – “Shadow Inventory” – was gobbled up by investors who now rent the properties. These factors and others have led to a low supply of homes, which in turn has intensified competition for existing properties and driven up home prices in many markets. Adding to the challenge for real estate consumers and the industry is that many homeowners are simply not listing their homes.
Overall, a significant majority of Homeowner Sentiment Survey respondents (71%) said U.S. real estate is heading in the right direction, though this number is down from first quarter results. Yet among contemplators – those who are considering selling their homes but have not yet listed – 73% point to home prices that have not recovered to pre-recession levels, and 61% say uneasiness about the U.S. economy has kept them on the sidelines to this point.
“This is a classic case of supply and demand,” said Berkshire Hathaway HomeServices President Stephen Phillips. “The low supply of homes in many markets creates a strong opportunity for those able and willing to list their properties. Good homes priced correctly are selling quickly in many cases.”
Opportunity also exists for buyers as mortgage rates remain near historic lows. And, as more homes come on the market, balance will return to U.S. real estate, Phillips added.
With inventory well below healthy levels, why are people so hesitant to sell?
“Though home prices around the country have recovered much of the ground lost during the downturn, contemplators are telling us they want more confidence in the decision to list,” said HSF Affiliates CEO Gino Blefari in the press release. “They’re also telling us they need more information about their markets, pricing and specific home improvement in order to list.”
It turns out that many homeowners perceive certain risks that are keeping them from selling. According to the survey:
- More than half of respondents don't realize that "the number of homes for sale on the market is low."
- 80% think credit scores make it difficult to get a loan.
- 76% believe stricter lending requirements make it more difficult to get a mortgage.
- 68% think that current homeowners are trapped into their mortgages and are unable to sell their current homes.
The disturbing thing about these statistics is that homeowners are clearly just lacking information. Now is a fantastic time to sell, but even though the market favors sellers, many homeowners are standing on the sidelines.
“Education is essential in today’s market,” explained Blefari in the press release, noting that 55% of contemplators said they’d be more likely to list if they had additional information on the home-selling process. “The stage is set for real estate professionals to connect with consumers, learn their needs and concerns and determine the best way for sellers and buyers to capitalize on the opportunities that exist today.”
Don't be one of those homeowners who doesn't have all the facts! If you've been on the fence about selling, now is the time to hop off and check out your home's rising value:
If you have any questions about the state of the Metro Detroit real estate market or the home selling process, please don't hesitate to reach out to a member of The Perna Team! I would love to help make you an informed buyer!
Please contact us online or call 248-270-2222 for more information on selling your home or the current real estate market.