Survey: Rising Prices Motivate Buyers to Purchase Now
By: Esther Cho
The expectation for prices to continue rising is creating urgency among consumers to buy now, according to a Redfin survey of 1,084 active homebuyers.
The percentage of homebuyers who believe prices are bound to move higher in the next 12 months increased to 71 percent in the fourth quarter from 61 percent in third quarter, according to the survey. The fourth quarter share is also more than double from 34 percent in the first quarter.
More respondents cited rising prices as an incentive to purchase a home now, with 33 percent falling into this category compared to 29 percent in the third quarter and 19 percent in the first quarter.
While rising prices are causing some buyers to purchase now, low inventory is prompting others to hold off on their search.
Thirty-eight percent of respondents say they plan to take a break and wait for more listings. Meanwhile, other buyers are compensating for the lack of listings by expanding their search area, with 46 percent indicating they are expanding into areas not previously considered.
Buyers still cited low interest rates as the leading reason to buy this year, but the share decreased to 57 percent in the fourth quarter from 64 percent in the third quarter.
According to the survey, Americans appear to be less discouraged by the state of the economy.
Just 22 percent of respondents say a weak economy is a major concern for buying now, a decrease from 27 percent in the third quarter.
As prices rise, the survey also found that during the nine months between the first quarter survey and the fourth quarter survey, the percentage of buyers who were also potential home sellers doubled from 8 percent to 16 percent.
Repeat buyers are also planning to make upgrades with their next purchase. When asked about the planned size of their next home compared to their current home, 49 percent indicated plans to buy a “much bigger” home, which was the most common response. In addition, 41 percent plan to buy a home that is the same size but nicer, more affordable, or in a different location. Redfin says it expects “2013 to be the year of the move-up buyer.”
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