SEATTLE, Oct. 27, 2020 /PRNewswire/ -- A historic
inventory crisis is driving up home prices to new highs, but
understanding why would-be sellers are sitting on the sideline had
been guesswork. Now a new Zillow survey[i] is shedding light
on how the pandemic is influencing homeowners who are considering
selling in the next three years, and the reasons why they're
staying put.
Life uncertainty, likely caused by COVID-19, is keeping more
than a third (34%) of would-be sellers out of the market. Financial
anxiety is a big part of that: 31% of homeowners considering
selling in the next three years say a current uncertain or
precarious financial situation is a reason to stay put, with 27%
reporting a recent change in employment with a decrease in hours or
pay, and 17% saying they or their spouse/partner were laid off or
involuntarily unemployed -- which could be barriers to finding a
new home.
A lack of certainty around where they work is another
contributing factor. According to Zillow's survey, the most common
change for homeowners in the past six months is that they are
working from home more often. Previous Zillow research finds
two-thirds of those working remotely during the pandemic say they
would consider moving if given the flexibility to continue
occasionally working from home. However, those plans may be in
limbo as homeowners await clear guidance from their employers on
when -- or if -- they will return to the office.
Nearly 40% of homeowners considering selling in the next three
years say they anticipate a more favorable sale price if they wait,
suggesting they don't feel pressure to list now in order to get a
good price. Median sale prices are at all-time highs, up nearly
11% year-over-year for the week ending September 5th. Seller optimism has also
rebounded; a September Fannie Mae survey finds a majority
(56%) of people think it's a good time to sell, compared to 29% who
felt that way in the spring.
"Potential sellers are likely correct that home prices have yet
to reach their peak, but in the long run prices tend to rise, so
there's no clear 'right time' to sell," says Zillow senior
economist Jeff Tucker. "Homeowners
who feel life is uncertain right now may think they can still get a
strong price if they delay selling until they have more clarity.
The catch is that waiting to sell may raise the cost of a trade-up.
This fall's record low mortgage rates, which make a trade-up more
affordable on a monthly basis, are not guaranteed to last."
More than 30% of homeowners (31%) considering selling in the
next three years say their plans are paused because they are
concerned about finding or affording a new home. A 2020 Zillow
report[ii] finds 63% of sellers are also buyers; these dual-track
homeowners may sell their home for top dollar only to enter an
extremely competitive buyer's market where homes are going under
contract in 12 days. Near-record low mortgage interest rates
are giving buyers a leg up, but homeowners are also taking
advantage of those low rates with 15% citing a recent
refinance as a reason not to list their home for sale.
Virus safety was one of the least-frequently cited concerns
among homeowners who have been hesitant to put their home on the
market. Zillow's survey found 25% of potential sellers said they
weren't selling because they were concerned about their household's
health and safety during the pandemic. The rapid adoption of real
estate technology such as 3D Home virtual tours and video
tours has allowed many home shoppers to limit in-person showings.
Those digital tools coupled with new safety standards and
cleaning protocols may be making more would-be sellers feel
comfortable during the pandemic.
A couple of other commonly-mentioned factors are holding
homeowners back from selling, but to a far lesser extent. Zillow's
survey found 6% of homeowners considering selling in the next three
years indicated that taking advantage of mortgage forbearance was a
reason to stay put. These programs allow homeowners to pause or
reduce their monthly mortgage payments. One out of 10 homeowners
said they weren't selling because an adult child or another family
member had moved in with them during the
pandemic.
The cumulative effect is a nationwide supply crisis with
inventory down 37% year-over-year. COVID-19 shocked the market
in early spring, prompting both buyers and sellers to pull back at
similar rates. Since then, buyers have returned to the market in
force, driven by demographic factors, low mortgage interest rates,
and the Great Reshuffling -- a pandemic-driven desire to move to a
home better suited for our lives in this new normal. Sellers have
been far more reluctant to return, leaving half a million fewer
homes on the market than a year ago. These survey results provide a
better understanding of all the reasons why many homeowners are
putting their selling plans on hold.
About Zillow
Zillow, the most visited real estate website in the U.S., is
building an on-demand real estate experience. Whether selling,
buying, renting or financing, customers can turn to Zillow's
businesses to find and get into their next home with speed,
certainty and ease.
In addition to for-sale and rental listings, Zillow Offers buys
and sells homes directly in dozens of markets across the country,
allowing sellers control over their timeline. Zillow Home Loans,
our affiliate lender, provides our customers with an easy option to
get pre-approved and secure financing for their next home
purchase.
Millions of people visit Zillow Group sites every month to start
their home search, and now they can rely on Zillow to help them
finish it — with the same confidence, ease and empowerment they've
come to expect from real estate's most trusted brand.
Zillow is owned and operated by Zillow Group, Inc. (NASDAQ:Z and
ZG).
[i] Zillow Group Population Science collected a nationally
representative sample of more than 1,000 homeowners (household
decision makers that own their home and did not move in the past
year). From September 29th
to October 5th, 2020, the
survey asked homeowners questions about their plans to sell and
recent life events. Among those who did not have their home listed
for sale (99% of the sample), the survey also asked why they were
not currently selling.
To achieve national representativeness, quotas for age,
ethnicity/race, education, income, region, relationship status, and
sex limited oversampling of any given demographic group. In
addition to quotas, ZG Population Science used statistical ranking
to weight the sample to the US Census Bureau American Community
Survey 2018 sample of homeowners. Weighting used the same variables
as the quotas. Margins of error are at a 95% confidence
interval.
[ii] Zillow Group partnered with independent market
research and data analytics firm YouGov® to conduct a nationally
representative, online quantitative survey that gathered
information from a total of 13,000 key household decision makers,
including 3000 buyers, 3000 sellers, 3000 renters that moved in the
past year, 3000 homeowners, and 1000 new construction buyers.
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SOURCE Zillow