Real estate

Real estate squeeze: rising interest rates and stubborn sellers’ prices

SCOTTSDALE, Ariz.–(BUSINESS WIRE)–HomeLight, the real estate technology platform that powers the nation’s top real estate agents, has released its Fall 2022 Top Agent Insights report, featuring the results of a survey of more than 1,000 top real estate agents in the country.

Rising interest rates initiated a shift from a relentless seller-dominated market. Over the past two years, over 90% of agents have consistently reported a seller’s market in their area. In our recent survey, however, only 51% of agents now describe their current local market as a seller’s market.

Buyers are also impacted. Home ownership has become more expensive due to rising interest rates caused by inflation, fewer buyers and softer demand. More than 89% of agents said 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 excluded from today’s real estate market, (2) overconfident sellers are slow to reduce prices, and (3) both factors lead to an increase in stocks sitting in the market.

Essential workers are continually shut out of the market.

Top real estate agents have noticed the following trends in their market:

  • Nearly half (49%) of agents say teachers in their market are routinely excluded from their prime areas near their school.
  • 24% of agents report that a lack of affordable housing near schools is causing more teachers in their market to retire or change fields.
  • A third (33%) of officers say nurses in their market are locked out of their prime areas near hospitals.
  • 21% of agents report that a lack of affordable housing near hospitals is causing more nurses in their market to change fields or seek options such as traveling nursing.

Overconfident sellers are slow to adjust prices, even with higher interest rates.

According to our survey, 86% of agents think sellers are overconfident in current pricing, leading to a lack of basic home preparation in three particular areas:

  • 65% of agents note that sellers are unwilling to pay for deferred maintenance, a necessity if they want to sell.
  • 57% of agents believe that listed homes are too crowded, which lowers their value in the buyer’s market.
  • 39% of agents cite a lack of appeal when sellers put their homes on the market.

Will Cook, one of HomeLight’s top agents in Palm Springs, California, said, “Every time the market moves away from a hot seller’s market, too many sellers fall victim to waiting too long to sale. They don’t understand the magnitude of the current market change and how quickly the market has moved so far in 2022. Many will kick themselves when they learn what it’s like to sell in a market much more slow in the second half of this year. The market is no longer instantaneous, and pricing a house correctly is absolutely crucial to success. »

However, it seems that a small minority of sellers are adapting. 27% of agents surveyed said their salespeople are now reviewing offers they previously turned down from buyers.

Lower demand from buyers and slower price movement from sellers lead to an increase in existing inventory.

One of the biggest trends affecting both buyer and seller experience is a sudden increase in supply. Seventy-two percent of agents say inventory is increasing, a drastic increase from 33% last quarter. Real estate agents expect this higher inventory to lead to continued pressure on prices.

  • 90% of agents say price cuts are more common, up from 34% last quarter.
  • 30% of agents expect house prices in their market to remain stable over the next six months.
  • 46% of agents expect home prices in their market to continue to decline, and only 22% expect to see house prices go up.

Overall, the real estate market is still in a transitional phase – although agents are starting to see normality on the horizon. “The frenzy is fading away,” said Jean Lewis, a top agent in the St. Louis, Missouri area. “The houses have been on the market for more than a few days. Buyers are not competing with as many other offers and we are seeing price reductions. »

For additional results, download the full HomeLight Fall 2022 Top Agent Insights report.

Survey methodology

HomeLight’s Fall 2022 Top Agent Insights report was conducted between July 25 and August 14, 2022 through an online survey of 1,005 top real estate agents across the country. Agents were selected to participate in the survey based on the same performance data that HomeLight uses to identify the best real estate agents for more than one million buyers and sellers nationwide.

About HomeLight

HomeLight is building the future of real estate – today. Our vision is a world where every real estate transaction is simple, certain and satisfying for everyone.

The best real estate agents are powered by HomeLight’s platform to compete and win. Together, we deliver better results to their clients at every stage of the real estate journey.

Our technology makes it easy to buy and sell homes, whether it’s enabling an all-cash offer, unlocking liquidity in an existing home to buy a new one, finding a prime agent, or create certainty through a modern closing process. Each year, HomeLight facilitates billions of dollars in residential real estate business on its platform for thousands of agents.

Founded in 2012, HomeLight is privately held with offices in Scottsdale, San Francisco, New York, Tampa and Seattle, with backing from leading investors including Zeev Ventures, Menlo Ventures, Group 11, Crosslink Capital, Bullpen Capital , Montage Ventures, STCAP, Citi Ventures, Google Ventures and others.

For more information and images: homelight.com/press