With millennials increasingly buying in the suburbs, tight inventory and affordability concerns, the lack-of-inventory problem will likely worsen.
WASHINGTON – March 16, 2016 – Over three-quarters of households surveyed recently by the National Association of Realtors® (NAR) would purchase a single-family home if they were to buy in the next six months, and 79 percent of renters would choose to buy a home outside the city.
NAR released those results as part of the second installment of its new quarterly consumer survey.
The survey also found that fewer renters think it's a good time to buy a home, particularly in the West where prices have risen solidly.
The survey found an overwhelming consumer preference for single-family homes in suburban areas. Most current homeowners (85 percent) and 75 percent of renters said they would purchase a single-family home – only 15 percent of homeowners and 21 percent of renters said that would buy in an urban area.
"The American Dream for most consumers is not a cramped, 500-square-foot condo in the middle of the city, but instead a larger home within close proximity to the jobs and entertainment an urban area provides," says Lawrence Yun, NAR chief economist. "While this is not a new discovery, supply and demand imbalances and unhealthy levels of price growth in several metro areas have made buying an affordable home an onerous task for far too many first-time buyers and middle-class families."
Yun says it's time for homebuilders to double their focus on constructing single-family homes. With millennials increasingly buying in the suburbs, tight inventory and affordability concerns, the lack-of-inventory problem will likely worsen.
Renters lose optimism about "good time to buy"
In a quarter-to-quarter comparison, NAR's survey found that the same share of homeowners (82 percent) but fewer renters (62 percent, down from 68 percent) believe that it's a good time to buy.
Yun attributes the high number of current homeowners who think it's a good time to buy as "no doubt being fueled by the $4.4 trillion in housing equity accumulation in the past three years. On the other hand, accelerating home prices and the perceived difficulty in obtaining a mortgage appears to be tugging at the confidence of renters."
Overall, respondents over the age of 65, those living in the Midwest and those with incomes over $100,000 were the most optimistic about buying now.
Among current homeowners, fewer (56 percent) believe it is a good time to sell quarter-to-quarter (61 percent). Amidst steep price increases and tight supply, respondents in the West were the most likely to think it's a good time to sell but not a good time to buy.
Slightly fewer households think U.S. economy is improving
Among all households in the survey, less than half believe the economy is improving (48 percent), down from 50 percent in last quarter's survey. Renters in urban areas and respondents with lower incomes were the most optimistic.
Location matters depending on lifestyle
When asked about future buying preferences, survey responses across all age groups were closely tied to each generation's typical lifestyle, with younger buyers being more likely to consider buying a single-family home. Renters and younger buyers would for the most part purchase larger homes, whereas older buyers would purchase similar or smaller sized homes.
Respondents over age 65 were most likely to consider a condo and nearly as likely as respondents under the age of 35 to consider purchasing in an urban area.
Over two-thirds of those living in rural areas and 75 percent of those living in suburban areas would buy in a similar area. Only those living in an urban area would be more likely to move elsewhere, with a suburban area within 20 miles of the city being the most frequent choice.
© 2016 Florida Realtors®. All rights reserved. Reprinted with permission.