Redfin, a real estate brokerage firm, released the results of its latest Real-Time Buyer Survey, which shows that for the first time in more than two years, homeowners are more concerned with housing affordability than lack of housing inventory.
The Real-Time Buyer Survey was conducted from Dec. 6 to Dec. 10, and was compiled from the answers of 1,308 Redfin customers throughout the country.
“Affordability in the area I want to buy” was cited as the biggest obstacle keeping potential homebuyers from entering the market, with 33 percent listing it as the main issue holding them back. “Low inventory” was the biggest obstacle for only 11 percent of survey respondents.
The percentage of survey respondents who feel that now is a good time to buy a home dropped 27 points, from 56 percent in the first quarter of 2012 down to 29 percent in the fourth quarter of 2014. Similarly, the percentage of respondents who felt that it was a bad time to buy increased from 1 percent to 11 percent during the same period.
“If you can’t afford any of the homes for sale, it doesn’t matter how many homes are on the market,” said Leslie White, a Redfin agent in Washington, D.C. “Despite the low interest rates, prices in D.C. are so high right now, many homebuyers feel priced out of the market. They’re being forced to decide between putting their home search on hold and renting another year, buying a significantly smaller home or looking in neighborhoods farther away from the city.”
According to Redfin, home prices are expected to continue to increase by 3 percent in 2015, and 59 percent of survey respondents agreed that home prices would “rise a little” in 2015.
In 2014, prices for homes in the low- to mid-range (usually below $310,000) increased by 12 percent, which is roughly double the 2014 average price increase for more expensive homes.
However, this price increase could be good news in the New Year, as more homeowners are expected to regain equity in their homes, allowing them to sell. Redfin estimates that 90 percent of homeowners will owe less than 80 percent of their mortgage in 2015, which could lead to a 5 percent to 7 percent increase in home affordability.