What Real Estate Agents Are Saying About The Housing Market
Inside Mortgage Finance sponsored a nationwide survey of 1,556 real-estate agents in mid-June. The responses are largely anecdotal, but they're still interesting. They also support several key themes in the housing market:
- The low end of the market--driven by foreclosures, first-time buyers, and investors--is cranking. Prices have fallen to the point where buying is often cheaper than renting, and the government's $8,000 first-time-homebuyer gift is helping many people jump in. Investors are also leaping in--either flipping houses bought at auction or planning to rent for a few years and then sell. Prices are low, but velocity is high.
- The high end of the market is dead--because sellers are still in denial, existing homeowners aren't trading up, and there are fewer foreclosures and forced sales at the high end (this may change). We and others still believe that the high end of the market will be the next shoe to drop in the housing market collapse.
- For those who already own houses, "affordability" is not a particularly meaningful measure of housing-market health--because they can't sell the houses they already own. Housing bulls often point to record "affordability" as an argument that house prices are about to rebound. Affordability is certainly driving sales among first-time buyers, but it doesn't help much in the existing-homeowner segment. Only 29% of current buyers (per the survey) are existing homeowners.
We've embedded a summary of the survey below.
Here are some more highlights:
- The market for home purchases [listings] can be divided into segments of 26% for damaged REO [bank-owned properties, not move-in condition], 23% for move-in ready REO, 14% for short sales, and 36% for non-distressed properties.
- Forty-three percent of homebuyers are first-time homebuyers, 29% are current homeowners, and another 29% are investors.
- First-time homebuyers account for the majority of move-in ready REO [bank-owned] sales while investors account for the majority of damaged REO sales.
- Real estate agents expect appraisal issues to be the No. 1 reason for cancellations of signed Purchase and Sales agreements over the coming summer months.
- Only 31% of non-REO home sale listings are unforced or optional; other major reasons for listings include financial stress (including short sales), long distance relocation, and divorce or estate sales.
- Homeowners are choosing to not list homes primarily because of “Falling prices,” followed by “Competition with distressed properties."
- For first-time homebuyers, “Government incentives to buy (tax credits, mortgage deduction)” is the No.1 motivation to buy.
- For current homeowners buying homes, “Retirement relocation” and “job relocation” are the No.1 and No. 2 motivations to buy, respectively.
- “Sale of residence” is the No. 1 impediment to current homeowners seeking to buy another home.
- “Downpayment for mortgage” is the No. 1 impediment to first-time homebuyers seeking to buy a home, followed by “Slow answers on short sale offers.” [A short sale offer is an offer below the value of the mortgage. The bank has to agree to sell the property for less than the amount of the loan.]
- On average, mortgage servicers take 9.5 weeks to provide a “yes” or “no” response to an offer to buy a short sale property.
- According to real estate agent respondents, “Mandated one-week response time on short sales offers” is the No. 1 rated action that the government could take to increase home sales and stabilize prices.
- According to real estate agent respondents, “Provide consistent one-week ‘yes’ or ‘no’ response to offers” is the No. 1 rated action that the mortgage servicers could take to increase short sales.
- According to real estate agent respondents, “Provide consistent one-week ‘yes’ or ‘no’ response to offers” is the No. 2 rated action that the asset managers could take to sell REO properties with lower overall losses; the No. 1 rated action is “Turn on utilities for inspections.”
Here's the survey. The anecdotal responses about various aspects of the real-estate market start on page 19.Real Estate Agent Survey June 2009