Photo credit: Cyndie
The uncertainty surrounding the upcoming US election is weighing on homeowner confidence, reveals new research.
Despite positive economic indicators like record wage growth and falling unemployment, housing confidence remained flat from June through September, according to the new ValueInsured Housing Confidence Index. Confidence has edged up by 1.9 points since March, with presidential contest between Hillary Clinton and Donald Trump one of the major factors keeping optimism subdued.
Combined with rising house prices, which are deterring renters from climbing onto the housing ladder, and “many prospective buyers really need a confidence boost,” says Joe Melendez, CEO of ValueInsured. Indeed, the survey results arrive at a time when the country’s economy is growing, employment figures are improving and mortgage rates are at historic lows, making property more affordable. The main obstacle is supply, which is failing to meet demand and causing prices to increase.
ValueInsured/s Housing Confidence Index is the aggregate mean of seven multidimensional confidence measures collected through a quarterly survey. Its latest edition highlighs the continued uncertainty and anxiety of millennials when it comes to real estate. Although three in four millennial non-homeowners (would-be first-time buyers) want to buy a home, two in five are confident they can afford a down payment.
Instead, millennials appear to be skeptical and bracing for potential volatility as the market continues to recover at different paces across the country.
“They are more likely to expect a price bubble and correction in the next two years than Americans overall (60 per cent vs. 47 per cent),” says the report. “Prospective first-time homebuyers in particular are nervous about market instability – only a quarter of these millennial non-homeowners are confident that the 2008 housing crisis will not happen again in their lifetimes.”
On the bright side, 70 per cent of millennials said the American Dream is alive and well. They do, however, describe it differently than past generations. They want to own a home but not be tied down by it. More than four-in-five (83 percent) millennials say their new definition of the American Dream is “owning a home on my own terms while staying mobile, agile and financially secure.”
The survey focusing on millennials follows a study by Zillow that found existing homeowners are increasingly confident that now is a good time to sell.
Homeowner confidence in selling on the up in the USA
2nd September 2016
Homeowners are feeling increasingly confident that now is a good time to sell a home in the USA.
Existing homeowners have a more positive attitude toward selling than buying, according to Zillow, an imbalance that is causing a slowdown in many markets, especially in the more expensive, urban cores. Less than 65 per cent of homeowners surveyed, though, said now is a good time to buy, a number that’s been declining for the past two years.
Confidence among homeowners is on the rise, with the most confident homeowners concentrated in Western and Southwestern cities. Out of every 10 homeowners surveyed, seven said now is a good time to sell a home.
Home values are at or past peak levels in roughly a quarter of US markets, signaling a recovery since the housing bubble bust, but a growing divide between renter and homeowner sentiments persists, highlighting two very different trends in the housing market right now.
Renters are feeling uncertain they’ll be able to afford to buy, with just 38 per cent of renters surveyed saying now is a good time to buy a home and about 50 per cent of renters in San Francisco and New York expressing a lack of confidence in their ability to afford a home in the future. Almost half of the renters surveyed in Seattle, San Jose and Boston had similar feelings.
“The overall health of the housing market looks great at first glance, but dig a bit deeper you’ll find inequality between renters and homeowners,” says Zillow Chief Economist Dr. Svenja Gudell. “Even though the majority of homeowners are confident and believe now is a good time to sell, they’re holding off because they expect home values to continue to appreciate and want to ride the wave. They also don’t want to turn around and become buyers in a competitive market. On the flip side, renters aren’t nearly as confident as homeowners – they’re discouraged by the shrinking number of homes for sale and rapidly rising prices. As housing gets more and more expensive, these trends are not sustainable in the long-run, especially once mortgage rates start to rise.”
The semi-annual U.S. Housing Confidence Survey, sponsored by Zillow and conducted by Pulsenomics LLC, asks 10,000 renters and homeowners about the condition of their local real estate market, their expectations for home value growth and affordability in the future, and their views on homeownership.
Housing confidence among homeowners continues to exceed that of renters in each of the metro areas surveyed. This gap is smallest in Miami and largest in Seattle, which has the highest year-over-year rent appreciation of the 35 largest US metros and rapidly rising home values, up 11 percent over the past year.
“During the past two years, housing confidence has increased in all but two of the metro areas that we study,” adds Terry Loebs, the founder of Pulsenomics LLC. “Rising home equity levels, healthy housing market expectations among millennials, and resilient homeownership aspirations among minority groups have all been factors in the robust readings of overall US housing confidence. However, within certain metro areas and market segments, key sentiment indicators have begun to fade.”
Fewer US renters planning to buy
15th September 2015
Fewer renters are planning to buy a home in the US, as confidence in the market begins to fade.
A new survey from Zillow shows that homeowners feel great about the current state of the housing market, but for the first time are less optimistic about its future.
The survey asked 10,000 renters and homeowners about the condition of their local real estate market, their expectations for home value growth and affordability in the future, and their aspirations for homeownership.
Past surveys found homeowners feeling exuberant about the future, with 5.2 million renters saying they planned to buy this year. Now, though, the percent of renters planning to buy has fallen from 12.1 per cent to 11.4 per cent in the first half of the year. The perception is that it is not such a good time to buy, with the portion of those believing recent homebuyers would be better off in 10 years’ time falling.
“The housing market is slowing down, and Americans’ confidence in the future of the market is understandably fading a bit, too,” say> Zillow Chief Economist Dr. Svenja Gudell.
Home value growth has slowed in almost all housing markets this year, giving homebuyers some breathing room. In those markets with marked slowdowns, many more buyers are looking to buy their first home. For example, eight per cent of Philadelphia renters said they planned to buy within a year in the January survey, when home values were rising at a 3.1 per cent annual rate.
The opposite occurred, though, in markets where home value growth is still well above national norms. Here, renters are less optimistic about their buying prospects. In San Francisco, 18 percent of 18- to 34-year-old renters planned to buy a home within a year when asked in January. At that point, San Francisco home values were rising at a 7.9 per cent annual rate. In July, home values were up an even higher 11 per cent year-over-year, and only five per cent of millennial renters surveyed then said they planned to buy within a year.
“Despite remaining quite confident overall, homeowners are less confident about the future than they are about the present. Seeing still stronger than normal home value appreciation in markets like San Francisco and Seattle might remind them of the last housing bubble. But the good news is things are leveling off with no crash in sight. If incomes rise to keep up with home values – and that’s a big if – people can count on homeownership in their future, even in hot markets.”