SEATTLE–A growing number of homebuyers are worried about competition, according to a new survey from Redfin of 975 homebuyers.
While affordability is the main concern keeping homebuyers up at night, Redfin said it found nearly 19% cited competition from other buyers as their top worry, up from 16% in February and 11% in November.
“Interestingly, fewer buyers were concerned about home supply this quarter than last, even though the dwindling number of homes for sale is the main driver of competition and affordability woes,” the company said.
Buyers’ concerns are justified. The company said it found 60% of Redfin offers have faced competition in May to date and over half of all offers faced competition for much of each of the last four years. With prices up nearly 5%, the thought of a bidding war would be particularly worrying for a cost-conscious buyer, Redfin said.
“Though enticed by high rents and low mortgage rates to begin a home search, first-time buyers face a number of obstacles in today’s competitive market,” said Redfin Chief Economist Nela Richardson. “In many cities, starter homes have seen the largest price increases because the supply of affordable homes on the market is so low and the demand for these homes is so high.”
Among the other findings:
- Rent remains too high. Those looking to buy are often fleeing an expensive rental market. Consistent with February’s survey, about one in four homebuyers surveyed this month cited high rent as their reason for house hunting, a significant jump since last August. The change is attributable to first-time buyers. In the most recent survey, over 50% said high rent led them to the market, as compared to only 25% of first-timers in August, Redfin said.
The only reason given more frequently was a major life event, such as the birth of a child or a marriage. No other option accounted for even 10% of the responses.
- Fewer homebuyers are worried about stock market fluctuations. Eighteen percent of homebuyers said that the recent turmoil in the stock market was a worrying economic sign that might signal a housing downturn, down five percentage points from February. Only 7% said stock market losses cost them money they had planned to use to buy a house, down from 12%. Seventy-two% said the stock market had no effect on their decision to buy.
- School quality and green space are very important to homebuyers. Buyers were asked to cite up to three of the most important factors in their choice of a home, beyond square footage and price. Three choices rose to the top: the layout, finishes and design were most important (46%), followed by school quality (41%) and a yard or green space (39%). Ease of commute came in fourth, checked off by 32% of respondents.
- Of buyers surveyed, 34% said they are more inclined to buy now than they were a year ago, up one percentage point from the previous survey and up five percentage points from the August report. Only 27% of buyers felt an increased urgency to buy before prices or mortgage rates rose, down four percentage points compared to last quarter.