Home sellers are facing new market dynamics this spring after two red-hot selling seasons in 2021 and 2022, during which prices soared and inventory fell. As of March 2023, home prices were still up 6.3% compared to the previous year, though price growth slowed for the ninth month in a row and homes took longer to sell. To understand how sellers are navigating the new environment, Realtor.com surveyed more than 1,200 recent or potential home sellers in February 2023.
Both sellers and buyers are in a tough spot this spring as low buyer demand means homes sit for longer and low affordable inventory means buyers are struggling to participate in the market. More than 85% of sellers surveyed were planning to buy a new home at the same time as selling. This makes selling a complex choice, requiring many buyers to buy into a higher mortgage rate.
More than three-quarters of sellers feel ‘locked in’ to their current home due to a low mortgage rate. More than half of sellers surveyed plan to wait until rates come down before selling, while 25% plan to sell soon for personal reasons, despite feeling locked in. Understandably, this feeling is most prevalent in younger generations, who likely have to consider more substantial outstanding mortgage debt as they contemplate next moves. The vast majority of Gen Z, Millennial and Gen X owners surveyed feel locked in by their current mortgage rate, with 97%, 87% and 87% of owners citing this feeling, respectively. However, a third of Gen X owners, the largest share for any generation, plan to sell anyway for personal reasons, despite feeling locked in, perhaps because they have lower amounts of outstanding debt. On the flip side, among Baby Boomers, who likely have the least debt, a majority reports not feeling locked into their current home by a low interest rate.
Owners who are planning to sell cite the potential for a profit, changing family needs, or desire for different amenities are their top reasons for considering a home sale. The youngest generation surveyed, Gen Z, cites affordability and proximity to family as their main drivers.
Despite the challenging housing market, 85% of sellers are happy with the amount of equity they have in their home. Three-quarters of sellers estimate they have over $100,000 of equity in their home, and 42% estimate more than $200,000 of equity. Owners have a near record-high level of equity in their home, positioning them well for a home sale.
By and large, potential home sellers expect to come away from a home sale with a favorable result. The hot 2021 and 2022 markets ushered in a new normal with bidding wars, fast sales and offers over asking being more commonplace. As a result, even in today’s market, more than a quarter of sellers expect a bidding war, 31% expect to get more than the asking price, and 37% expect to have an offer within a week while less than half (42%) expect to sell for the asking price. Despite the cooler market, 35% of potential sellers surveyed expect buyers to be willing for forego contingencies and 34% expect an all-cash offer. These expectations are generally higher than potential sellers held in August 2022, heading into the end of the year when high mortgage rates took a bite out of market momentum.
For sellers hoping to put their best foot forward in today’s market, it is important to offer a well-maintained, well-priced home. Though the market this spring will be affected by ongoing affordability challenges, buyers will be eagerly looking for move-in-ready homes at a fair price point. As the Best Time to Sell is upon us, sellers can attract buyer attention as new listings remain scarce relative to last year.