Home owners in the United States are wary of where the housing market is going, while rising prices in some markets are driving renters away from home ownership aspirations, a new report has found.
Overall, home owners are confident about the current state of the housing market, but they are less exuberant about future market performance, according to the mid-year results of the Zillow Housing Confidence Index (ZHCI).
Millennials are ready to buy in slowing housing markets, but they are dialling back their plans to buy in red hot tech markets like Denver, Seattle, and San Francisco, the index report points out.
Also, some 4.9 million renters say they plan to buy in the next year, down from 5.2 million in January, the survey of 10,000 renters and home owners also shows. That is down from 12.1% to 11.4% in the first six months of this year. A smaller percentage of those surveyed said it was a good time to buy.
The percentage of those surveyed who believe people who have recently bought a home will be better off in 10 years fell from 61% to 59%, the data also shows.
‘The housing market is slowing down, and Americans’ confidence in the future of the market is understandably fading a bit, too. Despite remaining quite confident overall, homeowners are less confident about the future than they are about the present,’ said Zillow chief economist Svenja Gudell.
‘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 levelling off with no crash in sight. If incomes rise to keep up with home values people can count on home ownership in their future, even in hot markets,’ added Gudell.
The report says that 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, 8% of Philadelphia renters said they planned to buy within a year in the January survey, when home values were rising at a 3.1%.
In July, when Philadelphia home values were flat, 18% said they planned to buy within a year. And many of those new potential buyers are millennials. Just 1% of 18 to 34 year old Philadelphia renters surveyed in January planned to buy within a year, but that had increased to 23% in the July survey.
The opposite occurred in markets where home value growth, despite having slowed overall, is still well above national norms. Here, renters are less optimistic about their buying prospects.
In San Francisco some 18% 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% annual rate. In July, home values were up 11% year on year, and only 5% of millennial renters surveyed then said they planned to buy within a year.
In January, 45% of all households surveyed in San Francisco said it was a good time to buy a home, and 4% said it was a bad time. In July, the numbers had flipped as 40% said it was a good time, and 46% said it was a bad time to buy.
Similar patterns played out in technology boom towns Seattle, San Jose and Denver as home values there kept soaring.
Despite high home values in San Jose, the Silicon Valley market was ranked first among 20 markets for housing confidence. Home ownership aspirations there, however, ranked behind more affordable metros such as Atlanta, Miami, and Las Vegas.
Seattle rose from number 10 to number two for housing confidence overall, and those surveyed expressed higher expectations for the housing market in the future. Denver, too, rose from number eight to number three, fuelled by both renters and owners feeling great about the market and expecting growth, even if they are less confident about their own ability to buy.
Terry Loebs, founder of Pulsenomics, which carries out the survey, pointed out that in the eyes of households in 17 of the 20 metropolitan areas, the outlook for the real estate market has dimmed since the start of 2015.
‘Given the outsized impact of home ownership on personal balance sheets and its interplay with the aspirations and behaviours of US consumers, if this downshift in housing expectations persists, it could portend a longer period of price deceleration and more sluggish consumer spending than some people are currently expecting,’ he added.
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Source: Property News Spain