Opendoor's regular survey of 4,000 homeowners shows an increase in intent to sell. Nathan Howard—Bloomberg/Getty Images
The past few years have been full of ups and downs for homebuyers and sellers, from homeowners navigating the height of a seller's market during the pandemic to buyers grappling with the most historic market change in 40 years. While it seems almost impossible to predict as we head into the traditionally busy spring selling season, there are early signs that 2024 could be the year of the “seller's sweet spot.”
Since 2021, Opendoor has conducted quarterly surveys of more than 4,000 prospective home sellers. The year-over-year quarterly tracking (starting March 2022) shows a relatively small change in the number of sellers who planned to sell during the year. There was also a slight decline in the second quarter.
However, the December 2023 survey found a significant 18% increase in the number of homeowners ready to sell over the next 12 months, the highest percentage of any quarter. We believe this significant increase in sentiment is a byproduct of two factors occurring simultaneously: enthusiasm for returning to the market and pent-up demand.
Will April showers bring more homes?
Although the real estate industry uses the Super Bowl as the official kickoff to sales season, data shows that sellers actually become more active several months later, from April to June. This year, we see sellers potentially exiting even earlier. From 2022 to 2023, the number of sellers planning to sell in the first quarter will increase by 7%.
Of course, there are multiple factors that go into determining the right time to sell. The most obvious ones include interest rates, housing affordability, and availability. What if just one of these big selling factors shifts to a more favorable situation? Our research also shows the potential for a big shift in seller sentiment.
Late last year, for the third time, the Fed kept interest rates on hold and hinted at the possibility of a rate cut in 2024. At the same time, the 30-year fixed rate peaked at 7.9% in October 2023 and steadily declined each year thereafter. A week later. We believe seller sentiment has started to improve as homeowners keep a close eye on both interest rate benchmarks.
Seller's sweet spot
What needs to happen for homeowners to run, rather than walk, to the sales starting line?Here, if one or all of these things happen, 2024 is exactly the sweet spot for sellers Here are some possible scenarios.
- Decreasing and/or stabilizing interest rates Increased market certainty for buyers and sellers. We previously noted that sellers are already starting to move to the sidelines as interest rates stabilize and then decline slightly at the end of 2023. A recent survey commissioned by Harris Poll backs up that data. 50% of respondents said interest rates are in 2023. If it is below 6.5%, people will start considering buying a home.
- Continuation of new housing manufacturer incentives Therefore, homeowners have an incentive to buy new homes and sell their current homes. One of the key factors in affordability is availability. Underbuilding has been a problem for decades. There is a shortage of approximately 3.8 million units in the United States. However, 2023 is a new year for new homes, with sales in December 2023 increasing by 4.4% compared to 2022. This is partly due to the creative incentives that builders can offer, such as rate buyouts, rate lock extensions, and closing cost discounts. . These incentives reduced the average price of new homes by up to 16% from October 2022 to October 2023.
- Already high rent increases or flat rates It moves prospective renters into the prospective buyer category. Rental housing affordability is at an “all-time low,” according to a new report from Harvard University's Joint Housing Research Center. Although interest rates are trending downward, a Harvard University study found that interest rates in 2022 are considered unaffordable for 22.4 million renters, the highest on record. I am. Renters make up about 36% of the U.S. housing market, so only a fraction of them may be fed up with rising rents and need to become buyers and give sellers more options. .
- The initial impact of the “silver tsunami” can be felt. Approximately 80% of adults over the age of 50 are homeowners, and baby boomers have now surpassed millennials as the largest generation of homebuyers. The number of sellers could increase significantly starting this year as the youngest baby boomers begin to retire. These are sellers looking to simplify their lives by downsizing or moving closer to family. The effects of this tsunami are just beginning to manifest in earnest and could have a major impact.
The 2024 sales season could break new ground. What remains to be seen is whether the sweet spot for selling coincides with lower mortgage rates, an influx of renters, a silver tsunami of movers, or increased new construction incentives.
Nick Boniakowski is Head of Agent Partnerships at Opendoor, where he oversees program strategy, growth, sales enablement, and collaborates with Opendoor to help the agent community serve more customers and grow their business. I am. As a third-generation broker, he has extensive experience working with buyers and sellers and now helps advise agents on how to meet their evolving needs. Prior to joining Opendoor, he held leadership positions at Anywhere Real Estate Inc. and Redfin Corporation.
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