SEATTLE--(EON: Enhanced Online News)--If mortgage rates rise from 4 to 5 percent, most real estate agents do not expect to see a dramatic effect in the real estate market, according to a survey of more than 800 agents conducted earlier this month by Redfin (www.redfin.com), the next-generation real estate brokerage.
“Many of my clients--both buyers and sellers--have expressed concern and hesitation about increasing mortgage rates”
Nearly 50 percent of respondents said that if mortgage rates increase from 4 to 5 percent within the next year, homebuyers will change their home search to look for cheaper homes. Nineteen percent said such a rate increase will have no effect on the market. Some agents thought the rate hike would more likely affect supply than demand, as 16 percent said prospective sellers locked into low mortgage rates would decide not to sell in order to hold onto their cheap mortgage. Just 16 percent said homebuying activity would decline dramatically.
When asked a similar question at the beginning of the month, only 2.6 percent of homebuyers said they would cancel their search if mortgage rates rose above 4 percent.
“Many of my clients--both buyers and sellers--have expressed concern and hesitation about increasing mortgage rates,” said Redfin Los Angeles real estate agent Arto Poladian. “The rate hike has led to a conversation that I haven’t had in a long time: the ability to buy down your mortgage rate. It does mean having to pay more up front, but it is a powerful way to keep your monthly mortgage payment within the budget you set when rates were still below four percent. Now that rates are on an upward trend I expect more people will be exercising this option.”
Despite concerns over rising mortgage rates and declining inventory, Redfin agents report homebuyers remain optimistic. Asked to choose one word that best described the general attitude of today’s homebuyers, 34 percent of agents said “hopeful,” which outranked other choices such as “fatigued,” disappointed” and “rushed.” Forty-four percent of agents said now is a good time to buy -- the highest this sentiment has been all year and just one percentage point lower than in December of last year.
Although rates are rising, real estate fees are on the decline. When asked how real estate fees have changed, if at all over the past year, 44 percent of Redfin agents said more agents representing the buyer or seller on the other side of their transactions offered either a discounted commission or a rebate of some kind. The proliferation of savings on real estate fees is a trend Redfin predicts will continue throughout 2017 as more innovation occurs in the market.
Redfin agents also provided insight into what prospective sellers who decide not to sell after all are doing with their current home. Fifty-five percent of Redfin agents said these homeowners decide to remain in place indefinitely despite a desire to move. Forty-four percent said sellers they work with typically still move, but choose to rent their previous home -- a contributing factor to declining inventory but a beneficial situation for current homeowners who are able to move-up and potentially earn income from rising rents.
“For some homeowners looking to move, it can be a wise decision to take advantage of the combination of rising rents and low mortgage rates by renting their current homes,” said Redfin chief economist Nela Richardson. “For this reason, we have a group of move-up buyers that are not making their starter homes available to the next generation of homebuyers, which is historically how more affordable inventory is added to the market. Unfortunately this hits millennials the hardest. This is a double-whammy for the inventory crunch since not only are there fewer homes for sale but the ones that do get listed are mostly in a higher price range.”
To read the full report, complete with data and charts, please visit the following link: https://www.redfin.com/blog/2016/12/agent-sentiment-survey-q4-2016.html
About the Survey
Redfin’s survey was conducted between Dec. 8 and Dec. 12, and includes responses from 827 real estate agents in 38 states and Washington, D.C.
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About Redfin Corporation
Redfin (www.redfin.com) is the next-generation real estate brokerage, combining its own full-service agents with modern technology to redefine real estate in the consumer’s favor. Founded by software engineers, Redfin has the country's #1 brokerage website and offers a host of online tools to consumers, including the Redfin Estimate, the highly accurate automated home-value estimate. Homebuyers and sellers enjoy a full-service, technology-powered experience from Redfin real estate agents, while saving thousands in commissions. Redfin serves more than 80 major metro areas across the U.S. The company has closed more than $31 billion in home sales to date, and saved customers more than $335 million in fees, and counting.
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