Rising Interest Rates and Stubborn Sellers Price Out Middle-Class Homebuyers.
HomeLight’s Fall 2022 Top Agent Insights Report shows essential workers’ struggle with home affordability, home sellers are slow to budge on pricing, and inventory is rising.
SCOTTSDALE, Ariz, September 13, 2022 – HomeLight, the real estate technology platform powering the nation’s best agents, published its Fall 2022 Top Agent Insights Report, featuring findings from a survey of over 1,000 of the top real estate agents across the country.
Rising interest rates have begun a shift from a relentless, seller-dominated market. Over the last two years, more than 90% of agents consistently reported a seller’s market in their area. In our recent survey, however, only 51% of agents are now describing their current local market as a seller’s market.
Buyers have been impacted as well. Homeownership has become more expensive due to higher interest rates caused by inflation, reducing the number of buyers, and easing demand. Over 89% of agents reported that bidding wars were on the decline in their markets.
In particular, our Fall 2022 Top Agent Insights Report revealed three major real estate trends: (1) essential workers are increasingly priced out of today’s real estate market, (2) overconfident sellers are slow to reduce pricing, and (3) both of these factors are leading to an increase in inventory sitting on the market.
Essential workers are continuously being priced out of the market.
Top real estate agents have noticed the following trends in their market:
- Almost half (49%) of agents say teachers in their market are routinely priced out of their first choice areas near their school.
- 24% of agents report a lack of affordable homes near schools is causing more teachers in their market to retire or change fields.
- One third (33%) of agents say nurses in their market are being priced out of their first choice areas near hospitals.
- 21% of agents report a lack of affordable homes near hospitals is causing more nurses in their market to change fields or seek options such as travel nursing.
Overconfident sellers are slow to adjust pricing even with higher interest rates.
According to our survey, 86% of agents believe sellers are overconfident in current pricing, resulting in a lack of basic home prep in three particular areas:
- 65% of agents note that sellers are unwilling to take on deferred maintenance, a necessity if they want to sell.
- 57% of agents believe listed homes have too much clutter, reducing their value in a buyer’s market.
- 39% of agents cite a lack of curb appeal when sellers put their home on the market.
“Every time the market transitions away from a hot seller’s market, too many sellers fall victim to waiting too long to sell. They don’t understand the magnitude of the current market shift and how quickly the market has evolved so far in 2022. Many will be kicking themselves as they learn what it’s like to sell in a much slower market during the second half of this year. The market is no longer instant, and properly pricing a home is absolutely crucial to finding success.”Will Cook, a top HomeLight agent in Palm Springs, California, noted
There is some indication, however, that a small minority of sellers are adapting. 27% of agents surveyed said their sellers are now revising offers they previously declined from buyers.
Lower buyer demand plus slow seller price movement is resulting in higher existing inventory.
One of the most significant trends that affect both the buyer and seller experience is a sudden increase in supply. Seventy-two percent of agents say inventory is rising, a drastic increase compared to 33% last quarter. Real estate agents expect this higher inventory to result in continued pricing pressure.
- 90% of agents say that price reductions are more common, compared to 34% last quarter.
- 30% of agents expect home prices in their market to remain flat over the next six months.
- 46% of agents expect home prices in their market to continue to fall, and only 22% expect to see home prices increase.
Overall, the real estate market is still in a transitory phase — although agents are starting to see normalcy on the horizon. “The frenzy is disappearing,” said Jean Lewis, a top agent in the St. Louis, Missouri area. “Houses are on the market for more than a few days. Buyers aren’t competing with as many other offers, and we are seeing some price reductions.”
HomeLight’s Fall 2022 Top Agent Insights Report was fielded between July 25-August 14, 2022 through an online poll of 1,005 top real estate agents across the country. Agents were selected to participate in the survey based on the same performance data HomeLight uses to identify top real estate agents for over a million homebuyers and sellers nationwide.
For additional findings, download the full HomeLight Fall 2022 Top Agent Insights Report.