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Buyers undeterred by rising prices and higher interest rates
CHICAGO – July 19, 2018 – Consumers aren’t fazed by housing shortages and rising home prices and interest rates, with 34 percent of buyers saying they weren’t being stopped by price and rate hikes.
According to realtor.com’s newly released survey The Home of Home Search, which is based on responses from more than 1,000 consumers who closed on a home purchase in 2018, 42 percent of respondents only had to make one or two offers in their home purchase process. Fifty-one percent of buyers said they didn’t pay above asking price, and 28 percent said they paid less than what was listed.
Danielle Hale, realtor.com chief economist, says part of the reason for the sunny outlook is that buyers who make it to the closing table are ready to roll with this challenging market.
“Successful homebuyers in 2018 have been exceptionally well-qualified,” she says. “We are seeing the impact of the inventory crisis in the data, and it’s holding back home sales. While would-be buyers struggle with limited inventory, rising prices and mortgage rates, those who closed were undeterred by today’s buyer frenzy. This is likely attributed to their experience, cash, and perhaps the market they’ve chosen to buy in.”
The average buyer who had the easiest time purchasing in the first half of 2018 was older than 55 years old, in the market for six months or less, made four or fewer offers on properties, and purchased a three-bedroom, two-bath home. Among buyers above 55 years old, 54 percent indicated no impact from rising costs, compared to 31 percent of buyers between the ages of 35 and 54 years old, and 23 percent of buyers between 18 and 34 years old.
Buyer findings
Some buyers said that they stayed ahead of the competition in their market by offering home sellers more cash.
Nearly a quarter said they paid cash for their homes.
More than 30 percent put more than 20 percent down on a purchase.
Larger down payments are most common among older buyers– 51 percent of buyers 55 or older put down more than 20 percent, versus 22 percent of 18-34 year olds or 32 percent of those between the ages of 35 and 54.
But even successful buyers weren’t immune to market conditions. This spring, home prices surged to new records, and 22 percent of buyers said the increased costs prompted them to look for a less expensive home. Nineteen percent said they had to increase their monthly mortgage budget.
Source: “Who’s Closing on a Home in the Most Competitive Market of All-Time?” realtor.com® (July 17, 2018)
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