Home buyers' and sellers' biggest misconceptions in a shifting market

Rhea-AI Summary

A new Zillow survey reveals key misconceptions among home buyers and sellers in the current market. 46% of agents believe buyers wrongly expect significant price drops, while 35% think waiting for lower mortgage rates is wise. Sellers anticipate outdated norms like bidding wars and quick sales. First-time buyers should prioritize financing and clarify their needs versus wants. Zillow forecasts a modest 1.3% increase in home values by September 2023, despite a cooling market. Agents suggest competitive pricing and timely home improvements are crucial for sellers in today's landscape.

Positive

• Zillow forecasts a 1.3% increase in home values by September 2023.
• Competitively priced listings are going under contract 10 days faster than before the pandemic.

Negative

• 28% of sellers have had to reduce their home's listing price, the highest since 2018.
• Sellers holding onto outdated expectations may struggle to sell their homes.

A new Zillow survey of agents reveals what buyers and sellers are getting wrong and what works in today's market

• The top misconception among aspiring home buyers, according to real estate agents, is that home prices will significantly fall. Zillow research finds a rapid drop in prices is unlikely. 
• Agents overwhelmingly say sellers continue to expect bidding wars, offers above asking price and quick sales, despite the cooling market.  
• The survey finds first-time home buyers should line up financing first and separate their wants from their needs before home shopping. 

SEATTLE, Nov. 7, 2022 /PRNewswire/ -- The housing market is rapidly rebalancing, but buyers and sellers are struggling to keep up with the changes. A new Zillow survey of real estate agents finds the most common misconception among would-be buyers is that home prices will crash, while sellers are holding on to outdated expectations of bidding wars and quick sales.   

Nearly half of agents (46%) say the biggest misconception among aspiring home buyers is that home prices will significantly fall, while more than a third of agents (35%) say prospective buyers mistakenly think they should wait for high mortgage rates to come down.  

"Buyers may think it's better to wait out the market, but in reality, there is more opportunity in this market than I have seen in the past five years if buyers approach real estate as a long-term investment, " said Michael Perry, an agent who leads The Perry Group in Salt Lake City, Utah. "If prices or mortgage rates take a meaningful dip, all those sidelined buyers will likely come rushing back to the market, driving up competition and prices. If a buyer can purchase today, they have bargaining power, more options and more time to find the right home, instead of being rushed into a purchase they might regret." 

Zillow research finds a rapid drop in home values is unlikely. Zillow's home value forecast predicts a flattening of home values over the next year, with prices increasing 1.3% by September 2023. Fewer new listings will keep upward pressure on prices. Meanwhile, some housing economists believe mortgage rates are more likely to rise than to fall as inflation pressures remain strong.

With volatile mortgage rates, 44% of agents say the most important action first-time buyers can take is to line up financing before home shopping. Zillow's affordability tools can help buyers understand how much home they can afford before getting pre-approved for a mortgage. First-time buyers should also understand what they're willing to compromise on before shopping for a home. More than a quarter of agents (28%) say the biggest mistake first-time home buyers make is failing to separate their wants from their needs. 

Buyers do appear to be taking advantage of today's more favorable market. Nearly 3 in 5 agents say buyers are taking more time to consider a home (56%) and making offers below list price more often (55%). More than 40% of agents say today's buyers are including more contingencies in their offers (43%), such as inspection and appraisal contingencies designed to protect buyers from unexpected costs. 

Sellers, meanwhile, may be holding onto outdated expectations. A vast majority of agents say it's a common belief among sellers to expect multiple offers on their home (81%), a price above market value (79%), a quick sale (79%) and no need to cut their price (74%). 

"Sellers can no longer put a for-sale sign outside their home and expect the offers to pour in," said Koby Sway, an agent with The Briley Team in Omaha, Nebraska. "They have to roll up their sleeves and make necessary repairs and home improvements before listing their home for sale. And it's more important than ever to get the pricing right when competing against other sellers for a smaller pool of buyers." 

Nearly 3 in 4 agents say pricing a home correctly is the most important seller strategy (73%). Competitively priced listings are going under contract in 19 days nationwide, 10 days faster than they were prior to the pandemic, while other homes are lingering on the market a median of 54 days. More than a quarter of sellers have been forced to cut their home's listing price (28%), the highest share since 2018. 

About Zillow Group

Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life's next chapter. As the most visited real estate website in the United States, Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting or financing with transparency and ease. 

Zillow Group's affiliates and subsidiaries include Zillow^®, Zillow Premier Agent^®, Zillow Home Loans™, Zillow Closing Services™, Trulia^®, Out East^®, ShowingTime^®, Bridge Interactive^®, dotloop^®, StreetEasy^® and HotPads^®. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org).

View original content:https://www.prnewswire.com/news-releases/home-buyers-and-sellers-biggest-misconceptions-in-a-shifting-market-301669901.html

SOURCE Zillow Group, Inc.

FAQ

What are the biggest misconceptions among home buyers according to Zillow's survey?

According to Zillow's survey, 46% of agents believe buyers wrongly expect significant home price drops, and 35% think they should wait for lower mortgage rates.

How is the housing market expected to change by September 2023?

Zillow forecasts a modest increase of 1.3% in home values by September 2023.

What should first-time home buyers focus on before shopping for a home?

First-time home buyers should prioritize lining up financing and separating their wants from needs before home shopping.

What strategies can sellers use to effectively sell their homes in today's market?

Sellers should competitively price their homes and make necessary repairs or improvements to attract buyers.

How quickly are competitively priced listings going under contract?

Competitively priced listings are going under contract in 19 days nationwide, which is 10 days faster than prior to the pandemic.