The housing market is red-hot and showing few signs of slowing down. Home prices were at a median $386,888 in June, according to Redfin, up 24% since last June. And demand is high: The average house lasted just 14 days on the market, a whopping 25 fewer than last year.
While that seems like welcome news to sellers looking to cash in, 45% of people told Rent.com that even after a home sale, they don't plan to buy another house right away.
Researchers polled 2,800 homeowners in June to see how the crisis changed their plans. Here's why people are forgoing the purchase of another house and what they're doing instead.
Hard financial times got worse for many Americans juggling expenses during the pandemic. Even with the profits from a sale in hand, buying another home as prices are soaring is just financially out-of-the-question for many respondents.
About 27% of recent sellers who aren't rebuying told Rent.com their top reason for not doing so was the price of homes. Another 5% said they aren't interested in getting into a bidding war.
That tracks with new data from Opendoor, which surveyed 800 Americans looking to buy or sell their homes in the next year. Nearly one in three sellers, 32%, said finding their next home to buy was a major concern. That's almost as many as those who were worried about getting the right price for their current home (36%).
"It is not surprising sellers are opting to rent, due to the all-time-high housing prices," says Washington, D.C., real estate investor Andy Kolodgie.
A lot of buyers have regrets about the home they chose — or about homeownership, full stop. A recent Bankrate/YouGov poll found that nearly two-thirds, 64%, of millennials (ages 25 to 40) had regrets about a home purchase.
In that survey, the top physical home regret was size: 30% of millennials were displeased with their home's square footage, thinking it was too big or small. The top financial regret was upkeep — over 20% of buyers said the cost of repairs was more than they budgeted for.
Video by Richard Washington
That coheres with Rent.com's data, which shows that many sellers are seeing the current market as a chance to get out of homeownership while turning a profit. Nearly a quarter of recent sellers, 24%, say they're not buying another property because they're no longer interested in being homeowners. Another 16% are looking to downsize to something smaller.
A moderate share of recent sellers (13%) told Rent.com they aren't rebuying because they plan to move in with someone else, usually a significant other. That's not a surprise, since "turbo relationships" have heated up of late, social scientists say.
As people lived in close quarters during pandemic lockdowns, some made big, sudden leaps to commit to their partner after getting to know each other better. Others camped with family, or decided to get roommates.
"Temporary housing for an indefinite period of time can be really tough, but is a good option for cost savings," says Kolodgie, who owns The House Guys.
If your co-living situation isn't permanent, set a timeframe for how long you'll be out of the housing game, he suggests. "This can create motivation, so you aren't just waiting around for the economy and real estate market to return to 'normal.'"
Many of those movers are taking a practical approach by renting until they get to know their new city better. Of recent sellers, 16% say they plan to do just that before they buy again.
Video by Richard Washington
If you're moving somewhere new, experts say it's smart to rent in different neighborhoods before settling on one. It could give your budget a break from the market craziness, too.
In an unfamiliar city, "I recommend renting before buying," realtor Jake A. Leahy recently told Grow. "While it may be tempting to buy first, getting a better idea of the market before making such a major investment can be a great idea. Even if you just find out which neighborhood you prefer, having 12 months or so of insight can be very helpful."
As you get to know your new area, keep an eye on the national and local real estate market, adds Kolodgie. "Watch how it's trending. Find people in the real estate market where you're looking to buy who know more about the local area than you. These experts can help guide you on when to make a move toward buying again."
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