Nearly one-third of the people planning to sell their home and buy another this year plan to ask for more than they think their house is currently worth. Based on the rapidly shifting market, this group of seller-buyers may be in for a rude awakening.
According to a survey of homeowners by Realtor.com and HarrisX, 72% of sellers in 2022 also plan on buying a home. Of this group:
- 32% plan on listing above their current home value
- 27% plan on asking for a quick close
- 24% said they will not accept offers below asking price
While it’s only natural to try to squeeze the most out of a home sale, sellers may be overestimating the amount of pricing power they still have in this market.
With 30-year fixed mortgage rates in the 6’s for the first time since 2008, homebuying demand is falling and inventory is rising. Sellers were squarely in the driver seat throughout the pandemic, but the fast-shifting market is transferring power back to buyers.
Demand is down 12% from last year, according to Redfin’s Homebuyer Demand Idex, and has been falling for eight straight weeks. Meanwhile, 21.2% of listings featured price drops in the four week period ending June 5 – the highest share since October 2019.
“Sellers are losing control of the housing market as homes that are overpriced and/or less desirable are increasingly having price reductions and taking longer to sell,” said Redfin deputy chief economist Taylor Marr wrote in a recent report.
It’s important to note that the housing market isn’t a monolith and some markets are cooling faster than others. Some sellers may be able to list and sell above market value with relative ease. But others may find that homebuyers are no longer willing, or able, to jump as high as they’re asking, which could throw a wrench in their selling-buying timeline.
The Realtor.com/HarrisX survey found that:
- 46% of seller-buyers plan to buy a new home before putting their current home on the market
- 44% plan to buy and sell at the same time
- 10% plan to sell first and live elsewhere while buying
Taken together, the prevailing sentiments for seller-buyers don’t seem to align with where the market is headed. Based on the top survey responses, there’s a substantial group of seller-buyers that plan to:
- Buy a home before they list their current one
- List their current home above market value AND refuse offers below asking
Three months ago, with mortgage rates still in the threes and inventory at record lows, this plan was much more likely to go off without a hitch. But since that time, the pool of homebuyers has diminished and the amount of inventory has increased, which means sellers that list too high and refuse to come down may find themselves with a “for sale” sign in their yard for longer than they expected.
If they’ve already purchased a home (as 46% intend to do), they risk paying two mortgages at once and having less money than expected to cover the closing costs of two transactions. And if they’re planning to buy and sell at the same time (as 44% intend to do) their timeline may get thrown off if they aren’t willing to budge on their list price.
With this in mind, perhaps the most telling survey response from this year’s seller-buyers is that 36% are concerned with the financial logistics of two transactions and moves.
For first-time buyers, understanding the mindset of seller-buyers may lead to leverage that closing table. A seller may be initially reluctant to budge on price, but once they’re staring down the barrel of two mortgage payments or need cash for their purchase, they may soften their stance.