Confidence in the economy is high, but optimism about ownership is not, according to the National Association of REALTORS® (NAR).
The amount of buyers who are confident about their prospects shrank to 68 percent in NAR’s quarterly Housing Opportunities and Market Experience (HOME) survey, a decline from 72 percent last quarter. Fifty-five percent of renters have the same sentiment—also a decline, from 60 percent in the quarter prior.
“The critical shortage of listings in most markets continues to spark a hike in home prices that is not easy for many buyers—and especially first-time buyers—to overcome,” says Lawrence Yun, chief economist at NAR. “Adding more fuel to the affordability fire is the fact that mortgage rates have shot up to a four-year high in just a few months. Many house hunters are telling REALTORS® that they are dispirited by the stiff competition for the short number of listings they can afford.”
There is a brighter outlook among sellers. More than three-quarters (74 percent) of homeowners are positive about selling today—the highest proportion since December 2015, and up from 71 percent last quarter.
“There’s no question that a majority of homeowners have amassed considerable equity gains since the downturn,” Yun says. “Home prices have grown a cumulative 48 percent since 2011 and are up 5.9 percent through the first two months of this year. Supply conditions would improve measurably, and ultimately lead to more sales, if a growing number of homeowners finally decide that this spring is the time to list their home for sale.”
More Americans (60 percent this quarter, versus 52 percent last quarter) are encouraged by the growth overall, believing the economy is progressing. The HOME Personal Financial Outlook Index, a gauge of whether or not Americans expect their finances to improve in the next six months, climbed to 63.8, from 59.1 last quarter.
“The jump in optimism to start the year can be attributed to the robust job creation in most of the country, as well as the larger paychecks households are enjoying because of faster wage growth and the recent tax cuts,” says Yun. “These three positives should further ignite buyer demand; however, several metro areas with the healthiest labor markets also have the most severe supply and affordability pressures. This troublesome reality is what’s dampening moods and keeping many would-be buyers at bay.”
NAR also assessed the hurdles keeping non-owners on the sidelines:
- 47 percent cited limited income;
- 30 percent cited debt from student loans;
- 28 percent cited growing rents; and
- 14 percent cited health/medical obligations.
Additionally, there are concerns about the mortgage process: credit, debt and income unknowns, according to the survey. Almost 30 percent of non-owners, notably, are unaware of what is needed to qualify.
“It’s never too early for those wanting to own a home in the future to sit down with a lender to discuss their current financial situation,” says NAR President Elizabeth Mendenhall. “Homeownership could be a more attainable goal once an interested buyer finds out how much they can afford to buy, as well as what steps, if any, are needed to improve their chances of obtaining a mortgage.”
For more information, please visit www.nar.realtor.
Suzanne De Vita is RISMedia’s online news editor. Email her your real estate news ideas at sdevita@rismedia.com. For the latest real estate news and trends, bookmark RISMedia.com.
