Home prices are up 14% compared to this time last year, and mortgage rates have driven the average monthly payment 50% higher over the same period, so affordability remains a key concern for people looking to move.
Nearly half (49%) of sellers said they plan to sell their home at $500,000 and below, with 15% of them aiming for $200,000 or less, according to a report released Tuesday by real-estate site Realtor.com.
This year’s sellers “are looking to buy their next homes at more approachable price points,” the report noted, with more than half (53%) of sellers aiming to buy a property priced at $500,000 and below, and 17% looking for one costing $200,000 or below.
Roughly 29% of sellers are trading up, and 32% making a lateral price move. (This is the first year Realtor.com asked these specific questions.)
An encouraging sign
There are signs that the housing market is slowing. Sales of new homes fell in April for the fourth month in a row to the lowest level since the pandemic owing to high prices and soaring mortgage rates.
Mortgage rates jumped from just 2.75% in the fall for a 30-year fixed to more than 5.25% in mid-May. Low mortgage rates had made it easier for buyers to purchase a home despite record prices.
“The distribution of sale prices points to an encouraging sign for many buyers who found last year’s housing market highly frustrating due to escalating prices,” the poll of more than 3,000 home buyers and sellers said.
“An increase in the number of affordably-priced homes for sale would be welcome news for markets,” it said, adding that nearly one-third of homeowners plan to sell their homes in the trade-up range of $500,000 to $1,000,000.
George Ratiu, senior economist and manager of economic research at Realtor.com, said the report “offers hope” for seller-buyers, who’ve been helped by the rise in remote work, which shows significant staying power.
“Many move-up buyers are leveraging newfound flexibility to employ creative strategies, such as relocating to an area offering homes that meet their family’s needs without breaking their budgets,” he said.
(Realtor.com is operated by News Corp subsidiary Move Inc., and MarketWatch is a unit of Dow Jones, which is also a subsidiary of News Corp.)
However, the shift to remote work is a double-edged sword: Working from home also explains over half of the 23.8% national increase in house prices between 2019 and November 2021, an economic study released last week concluded.
That rise in house prices has pleased those homeowners who have been able and willing to sell, but it has also caused heartache for millions of first-time buyers who yearn to get a foot on the property ladder.
The median sales price jumped to $450,600 last month from $435,000 and hit the highest level on record. The average home price was even higher at a record $570,300, underscoring that the majority of properties for sale are on the more upscale side.
What’s more, nearly three-quarters of homeowners surveyed by Realtor.com who plan to sell their home in 2022 are also buying a home at the same time, Ratiu said, which he said adds “complexity to an already challenging task.”
“While sellers stand to cash out record-high equity upon closing on their home, they are also facing higher prices and interest rates on their next home,” the report said.
(Jeffry Bartash in Washington, D.C. contributed to this report.)