Both economic and personal concerns are stopping renters from buying homes, according to the latest Housing Opportunities and Market Experience (HOME) survey from NAR.
Conducted on a quarterly basis, the HOME survey polled Americans about their confidence in the U.S. economy and their expectations for housing. Below, we have spotlighted the survey’s main findings:
1. Lessening Zest to Buy – Although a majority of homeowners and renters still think it is a good time to buy (78 and 60 percent, respectively), both shares are down 2 percentage points from earlier this year; even more, the renter share is down from 68 percent a year ago.
2. Price/Inventory Poison – Lawrence Yun, NAR’s chief economist, stated that rising home prices and dwindling inventory (trends that are certainly afoot here in our local market) have both played a role in souring consumer attitudes on homebuying. “This summer’s historically low mortgage rates injected some additional demand into the market, but the dearth of homes for sale continues to keep a lid on sales but not prices,” he said.
3. Mortgage Market Confusion – Yun cited a lack of knowledge about low-downpayment mortgage options as a possible cause for consumers’ homeownership skepticism. According to NAR’s survey, of all ages, income brackets and education levels sampled, less than 20 percent were aware of such mortgage options.
Even more, a sizable share of today’s homeowners required unique assistance to make their home purchase. Nineteen percent of current homeowners said they received down payment assistance from a parent/relative, as did 34 percent of Millennial homeowners.
4. Economic Insecurity – Finally, the HOME survey spotlighted a profound range of economic sentiments among the American public, not all of them reconcilable. For instance, only 48 percent of households think the economy is improving, and that share is even lower among rural residents (37 percent) and Americans aged 65 and older (39 percent); yet, at the same time, the HOME survey’s Personal Financial Outlook Index, which tracks confidence in one’s financial situation, is up 10.6 percent from last year.
As with many other dimensions of the post-recession economy, the HOME survey points to a population that is cautiously optimistic, and unwilling to put their confidence fully behind where the economy is heading. What remains to be seen is how housing responds to that uncertainty, and how agents’ business will be impacted.