In December 2016, Redfin commissioned SurveyGizmo to survey 3,352 Americans in 11 metropolitan areas who bought or sold a home in 2016, attempted to do so or planned to do so in 2017. SurveyGizmo identified respondents to this survey without Redfin’s involvement, though 94 of the respondents turned out to be Redfin customers. The purpose of the survey was to better understand the perspectives and experiences of people who were in the market to buy or sell a home last year, and to note changes since our last major survey from June.
Following are six major findings:
- Most sellers are negotiating for lower commissions, and Millennials are the most likely to negotiate.
- Online home-value estimates are kind of addictive–nearly three out of four sellers checked theirs at least weekly before deciding to list. One in five checked daily or near daily.
- Rising mortgage interest rates haven’t deterred most homebuyers.
- The top economic concerns are income inequality and affordable housing.
- Many homebuyers, especially Millennials, are hesitant to move to an area where people have different political views from their own.
- Nearly half of minority homebuyers felt potential discrimination because of their race.
“Millennials are more data savvy than previous generations and naturally comfortable taking advantage of the relatively recent data transparency and technological innovations in the industry,” said Nela Richardson, Redfin chief economist. “This makes them more informed than any cohort the housing market has ever seen, and partly because of that, more willing to negotiate fees. Millennials’ hesitance to move to places where people have different political views suggests that our already deeply divided nation could become even more geographically segregated by ideology. As Millennials age into peak home-buying years, we will continue to see their preferences reflected not only in how homes are bought and sold, but also the makeup of cities and neighborhoods across the country. This carries big implications for the future of our political parties and electoral outcomes.”
1. Most sellers are negotiating for lower commissions.
A majority (57 percent) of sellers last year tried to negotiate their listing agent’s commission to a lower price, up from 52 percent in June. This upward trend is partly driven by Millennial sellers, 66 percent of whom said in December they had attempted to negotiate with their agent. That’s compared to 58 percent of Gen-Xers and 39 percent among Boomers. As the youngest housing-market participants and the largest generation, Millennials have the most potential to affect the future of the industry, which means that pressure to lower commissions is likely to continue. Somewhat surprisingly, Millennials made up a sizeable share, 35 percent, of sellers who responded to the survey.
It’s worth noting that in a seller’s market like we have been in for the past several years, it makes sense that there would be downward pressure on listing agent commissions. Savvy homeowners understand that the forces of supply and demand are working in their favor, which can make a compelling case when negotiating fees with a listing agent who is trying to earn their business.
The survey findings indicate that buyers are saving, too. Nearly half (49 percent) of buyers said they got a refund, closing-cost contribution or other consideration from their agent worth $100 or more, up from 46 percent of buyers who said the same in June 2016.
2. Nearly three out of four sellers checked their online home-value estimates at least weekly before deciding to list their home for sale. One in five checked daily or near daily.
Among people who sold or tried to sell a home last year, 72 percent said they checked their online home-value estimates at least once a week before deciding to sell. Twenty-two percent checked their estimates daily or near daily. Millennials were more likely to check their estimates frequently, with 78 percent saying they checked them at least once a week and 28 percent daily or near daily.
Ninety-five percent of people who sold or tried to sell a home last year said that they checked their estimate at least once. Among those respondents, 92 percent reported that the estimate had an effect on their home-selling plans.
Home-value estimates had an impact on buyers’ decisions, too. Among people who bought or tried to buy a home last year, 84 percent said that seeing online home-value estimates affected their home-buying plans.
The survey results emphasize that consumers value a simple, immediate online answer when trying to price a home they own or a home they want to buy, but the results also underscore the importance of using the most accurate home-value estimate possible. Redfin recently published the results of a study it commissioned finding that the Redfin Estimate more accurately predicted the value of thousands of homes listed for sale than estimates from the other leading providers of public home-value estimates.
3. Rising mortgage interest rates haven’t deterred most homebuyers.
At the time of the survey, mortgage rates had just broken 4 percent, and we asked homebuyers how they would react if rates were to rise further. Fewer than 3 percent said they would cancel their plans, and 26 percent said they would slow down their search to see if rates dropped again. However, 24 percent said their urgency would actually increase before rates rose even higher. Twenty-five percent said higher rates would have no impact on their plans, and 23 percent would look in other areas or buy a smaller home.
When the Federal Reserve meets this week, it is expected to raise interest rates for the second time in just three months. We expect that very few buyers will drop out of the housing market as a result.
4. The top economic concerns are income inequality and affordable housing.
When asked what they see as the top three economic concerns facing the U.S., 42 percent of respondents selected the size of the income gap between rich and poor, closely followed by affordable housing at 41 percent. The federal budget deficit was the third-most selected concern at 35 percent. These ranked as the top three concerns consistently across genders, races and generations.
While these are the most-cited economic concerns from our respondents, it’s interesting to note that the percentage of Americans listing the economy in general as their top concern is at its lowest level in a decade, according to ongoing polls from the Gallup Organization. Meanwhile, concerns about noneconomic issues such as poor government leadership, racism, immigration and healthcare are becoming more commonplace.
5. Many homebuyers, especially Millennials, are hesitant to move to an area where people have different political views from their own.
Among people who bought or tried to buy a home last year, 42 percent said that they would be hesitant about buying in an area where people had different political views. Half of the respondents were neutral, and 8 percent said they would be enthusiastic about the prospect of moving to an area where most residents have differing political views. When broken out by generation, nearly half (47 percent) of Millennials and nearly a third of Boomers (30 percent) reported being hesitant.
Polls suggest that Americans today have never been more deeply divided along political lines, and our data suggests how that divide may shape our country’s neighborhoods, cities and electoral maps in the coming years, with younger Americans feeling more inclined to self-segregate with others who share their views.
6. Nearly half of minority homebuyers felt potential discrimination because of their race.
We asked respondents who bought or tried to buy a home last year if, during their homebuying process, they ever felt that sellers or seller agents were less eager to work with them because of their race or ethnicity. Half (49 percent) of minority homebuyers answered “yes” or “maybe,” as did 28 percent of white respondents. We recently published a separate report that further outlines these findings.
Redfin contracted SurveyGizmo to field a study between December 2 and December 16, 2016, using the SurveyGizmo audience platform to reach 3,352 people from the general population who indicated they had bought or sold a home in the past year, tried to buy or sell a home in the past year or plan to do so this year. The survey targeted 11 major metro areas where Redfin has its largest market share (Baltimore, Boston, Chicago, Dallas-Fort Worth, Denver, Los Angeles, Portland, San Diego, San Francisco, Seattle and Washington, D.C.). Out of the 3,352 respondents, 1,352 had successfully bought a home (including 84 with a Redfin agent) and 742 had successfully sold a home (including 28 with a Redfin agent). 708 people tried to purchase a home but were unsuccessful, and 474 people tried to sell their home but were unsuccessful.
Comparisons were made using results from similarly commissioned surveys conducted by SurveyMonkey in December 2015 and July 2016 with responses from more than 2,000 people across the country who had bought or sold a home in the prior two years.
Responses from Redfin customers were excluded from the reported findings on seller and buyer savings.
More detailed information about the questions, answer choices, respondent pools and calculations are available in a methodology and data addendum, which can be downloaded here. For more information about the survey and its findings, contact Redfin Journalist Services at firstname.lastname@example.org.
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