December 7, 2023 - Sejal Naik
Results from Flash Survey #20: Are Buyers Leaving the Market?
The fast-paced market is creating frustrated buyers who are losing out on homes. They may be losing out to cash offers. Or offers that are tens of thousands of dollars above list price. Or offers with few or no contingencies. Or all of the above!
With inventory still at very low levels and home prices rising, some discouraged buyers could decide to put off their home search altogether. In the June 2021 Flash Survey, we heard from 900 Virginia REALTORS® members, including 655 REALTORS® who had been involved in an unsuccessful home purchase transaction in 2021.
Here are highlights from the May Flash Survey:
- More than 8 out of 10 REALTORS® (81.2%) said that in the past five months they have been involved in at least one real estate transaction where someone was unsuccessful in the home purchase transaction.
- First-time homebuyers were most likely to lose out on a home purchase. Sixty percent of REALTORS® said that the unsuccessful buyer was a prospective first-time home buyer, while 38% said he or she was a repeat buyer, and two percent were unsure.
There could be many reasons for a buyer to be unsuccessful in a home purchase. Most unsuccessful buyers lost out because another offer was higher. Specifically, 83.5% of REALTORS® said that the home purchase transaction was unsuccessful because someone else offered a higher price. About 68% of REALTORS® said that an offer with better terms was a reason the buyer was unsuccessful.
- Other reasons for losing out on a home, including the inability to qualify for a loan (5.6%) or an appraisal that came in too low (5.2%), were much less likely reasons.
- Despite losing out, REALTORS® say that most buyers continued with their home search. Nearly three-quarters (74.6%) of REALTORS® said that the client kept going with their home search and looked at other homes after the unsuccessful offer.
- A little more than a third of REALTORS® (36.5%) said that after the unsuccessful offer, the client decided to pause his or her home search.
- Some prospective home buyers decided to rent instead of buy. One out of five REALTORS® said that the unsuccessful buyer stayed in their current rental home. About 15% of REALTORS® responding to this survey said that after an unsuccessful purchase offer, the client decided to try to look for a rental property.
A note about surveys: This is not a randomized sample survey of Virginia REALTORS® members. However, the number of responses and the geographic coverage of respondents make it possible to draw conclusions about the population of Virginia REALTORS® working with buyers and sellers in 2021, with a certain level of confidence. These statistics from this survey have a margin of error of +/- 3.8%.
Responses to our surveys are confidential. We do not look at individual responses but rather report data in the aggregate.
Virginia REALTORS® reports on the economy and housing market in Virginia. New information is updated on the Virginia REALTORS® website. A new Flash Survey is sent out at the end of each month. If you have a comment or would like to make suggestions for a future Flash Survey topic, click here to contact Virginia REALTORS® Chief Economist Lisa Sturtevant, PhD.