There’s a new trend among 2014 homebuyers: the decision NOT to sell their current homes when they move. For the latest Redfin Real-Time Buyer Survey, we polled 1,909 homebuyers across 22 major metro areas in the U.S. Among homebuyers who already owned a home, 39 percent said they planned to buy a home and rent out their existing home instead of selling it, thus further limiting the number of homes available for sale.
“Many of my homebuying clients refinanced and locked in a very low mortgage rate in recent years, said Redfin Baltimore agent Taylor Connolly. “That low rate, combined with a strong rental market, means they can charge more in rent than they pay in mortgage each month, so they are going for it,” Connolly said. “My family is in the same boat; when we move up this year, we plan to keep and rent out our current home.”
But the benefit of renting is not just financial.
“Keeping their old home means they won’t have to risk becoming temporarily homeless like those whose homes sell quickly, but can’t find a new home before they have to move out,” Connolly said.
Homebuyers in the first quarter were significantly less enthusiastic about buying a home compared with a year ago. The culmination of an ever-worsening inventory situation,rising prices and mortgage rates, and a market that requires buyers to move fast and compete aggressively has made homebuying not for the faint of heart. These factors probably explain, in part, why 27 percent of respondents decided to buy a home first, before they sold their current one.
Alarmingly, more than a third of buyers said that rising mortgage rates could soon make them reconsider buying a home right now. No wonder the rental market is so strong.
Buyers See Rental Opportunities…
… But Overall Enthusiasm Has Slumped
Far fewer homebuyers consider now a “good time” to buy a home, with just 25 percent in the first quarter compared with 40 percent in the first quarter of 2013. Meanwhile, 52 percent say it is an “OK time” to buy, compared with 45 percent last year.
Buyer Grievances Are Numerous
Topping the list of buyer frustrations are “Low inventory” (61%), “Rising prices” (57%), and “Competition” (53%). Notably, the percentage of respondents who cited “Rising prices” increased 17 points from 40 percent last year.
* “Competition” is a new option this quarter
Fewer Homes For Sale, Fewer Tours
This quarter, 90 percent of survey respondents said that tight inventory had limited them from taking home tours either “A lot” (46%) or “Somewhat” (44%).
Buyers Nearing Mortgage Rate Threshold
In the first quarter, 37 percent of respondents said that if mortgage rates reached 5 percent, they would reconsider buying a home right now.
About the Survey
This survey was taken between Feb. 20 and 24, 2014. Survey respondents included 1,909 Redfin homebuying customers. Respondents spanned 22 metropolitan markets in the U.S.: Atlanta, Austin, Baltimore, Boston, Charlotte, Chicago, Dallas, Denver, Houston,Los Angeles, Orange County, Miami, Long Island, Philadelphia, Phoenix, Portland,Raleigh, Sacramento, San Diego, San Francisco, Seattle, Washington, D.C.