Affordability has been the main worry for a while, but competition is a relatively recent concern among homebuyers
Cost is always a concern when buying something, regardless of what it is. Whether it is an ice cream cone or a new car, people are always looking for the best deal and high prices consistently have the effect of turning people away. With home prices continuing to rise, it should come as no surprise then that affordability is the biggest worry among homebuyers in the second quarter of 2016. Some 26 percent of people selected it as their top concern about buying a home according to a Redfin survey of 975 homebuyers conducted earlier in May.
But what is also interesting is the increased number of people citing competition from other buyers as their biggest worry. In the second quarter of 2016, 19 percent of people said competition was their biggest concern, a 3 percent increase from the first quarter of 2016 and an 8 percent increase from the final quarter of 2015. Another interesting note is the decline in the share of people who are concerned about inventory, which dropped 5 percent from the first quarter of the year to 15 percent. Even though the shrinking inventory is a huge part of the reason for both competition among buyers and affordability issues, fewer people seem concerned about it.
Major life events (such as marriage or having children) remained the number one factor driving renters to make the decision to buy, but high rent prices are continuing to close the gap and have been steadily increasing as a driving force for buyers for the past few quarters. In the third quarter of 2015, 26 percent of survey respondents cited life events as influencing their decision to buy while only 13 percent said it was because rent was too high. In quarter two of 2016, those numbers were 28 percent and 24 percent respectively.
Additionally, fluctuations in the stock market are not worrying buyers as much as in the past as 72 percent said recent stock market turmoil had no effect on their decision to buy. Meanwhile, 18 percent said it is a worrying economic sign that might signal a housing downturn and 8 percent said it made real estate a more attractive investment.
Outside of square footage and price, buyers selected the quality of the home and its layout, school quality, and yard or green space as the most important factors in choosing a home with corresponding shares of 46 percent, 41 percent, and 39 percent.
For the full breakdown of the Redfin survey, follow the link below.