The number of buyers who believe prices will increase in the next year shot up even higher in the first quarter, while the share of buyers expecting big price gains dramatically increased. Twenty-two percent of respondents expect home prices in their area to “rise a lot” over the next twelve months, up from just 10% last quarter; 57% expect prices to “rise a little” a decrease of four percentage points over last quarter. Thirteen percent expect prices to “stay the same,” 5 percent expect prices to “drop a little,” and less than 1 percent expect prices to “drop a lot.”

Buyers Believe Now is A Good Time… to Sell

For the first time since we began conducting this survey, more buyers believe that now is a good time to sell than believe it is a good time to buy. Just 40% of respondents indicated that they believe now is a good time to buy a home in their neighborhood, down from 48% last quarter. At the same time, 48% of respondents now believe it is a good time to sell a home in their neighborhood, up from just 27% last quarter. This dramatic flip is no doubt a result of the increasingly tight inventory situation around the country that we have been chronicling since the start of the year.

Rising Prices Drives More Buyers Into the Market

Low interest rates was still the top factor in why buyers want to buy now, selected by 58% of respondents, but rising prices shot up seven percentage points from 33% in the fourth quarter to 40% in the first quarter–the same share that “low home prices” was at when we launched this survey a year ago.

Low Inventory and Rising Prices Top Buyer Concerns

When asked about your “major concerns with buying a home this year,” the most common response was yet again “not enough good homes for sale,” which shot up from 59% in the fourth quarter to 66% in the first quarter. “General economic concerns” fell again this quarter, dropping to just 19%, while “prices are increasing in my area,” shot up another seven percentage points to 40% in the fourth quarter.

Low Inventory Forcing Expanded Searches and Bigger Budgets

In response to the one-two punch of rising prices and tight inventory, more buyers are expanding their home search to new areas they haven’t considered before. Fifty-one percent of respondents said they were “looking in new areas,” up from 46% in the fourth quarter. More buyers are increasing their budgets, as well. Thirty-four percent of respondents said they were “ready to pay more,” up from 26% last quarter. The percentage of buyers who are “taking a break” dropped this quarter to 32%, down 6 percentage points from last quarter.

With February not even behind us yet, the tightness we’re seeing in home inventory and the frequency of multiple offers is more typical of a spring market. Buyers are feeling the pinch and few are backing down. With expectations set for even more price increases in the coming year, anyone thinking of getting into the market as a buyer in the coming months should expect to encounter an intense market, where sellers have a clear upper hand.