House Buyers Worried They’re Losing Bargaining Power

While home buyers have been holding a lot of bargaining power in the housing market the last few years, more of them say they are now feeling the market shift against them, according to a new survey.

Seven in 10 home buyers say they’ve faced competition on a home for at least one offer, according to a recent survey of 982 buyers in 19 markets conducted by Redfin. Of those surveyed, 46 percent say now is a good time to purchase a home — that’s down from 56 percent in the first quarter. On the other hand, the number of those who are saying it’s a good time to sell grew by 13 percent in that period. Thirty-two percent now say it’s a good time to sell.

“Many buyers who emerged from hibernation this spring eager to take advantage of low rates and near-bottom prices now seem to have become demoralized by the intense competition for a limited selection of homes for sale,” Redfin said in a public statement about the survey results.

Home buyers surveyed by Redfin…
  • Believe that the market may be shifting against them: 46% of respondents believe now is a good time to buy, down two quarters in a row; in the first quarter it was 56%. Thirty-two percent believe now is a good time to sell, up two quarters in a row; in the first quarter it was 13%.
  • Are more confident that home prices are on the rise: 61% believe prices will increase, up two quarters in a row; in the first quarter it was 32%.
  • Increasingly prefer a conventional sale over a foreclosure or short sale: 62% of respondents were “very interested” in conventional sales, up from 57% in the second quarter and 48% in the first quarter, marking a return to normalcy after years of bargain-hunting;
  • Are more likely to back off when faced with multiple offers: 31% said they would step back from a bidding war, compared to 28% in the second quarter, the first time we asked this question. Just 8% would do whatever it takes, compared to 10% a quarter earlier.
  • Have growing concerns about the economy, despite rising home prices: 27% of respondents cited general economic weakness as a concern about buying this year, up from 24% in the second quarter and 20% in the first quarter.

Home buyers may feel more urgency too. The survey found the number of buyers expecting home prices to rise drastically grew — 61 percent say prices will rise compared to 32 percent during the first quarter. However, they are reluctant to get in a multiple-offer situation. Thirty-one percent of those surveyed said that if they faced a multiple-offer situation, they would back off.

SOURCE: Redfin