Survey – Boomers More Optimistic, Millennials Patient
Homeowner Sentiment Survey finds that current and prospective homeowners remain optimistic about the current state of the U.S. real estate market.
IRVINE, Calif. – August 24, 2016 – The latest Homeowner Sentiment Survey finds that current and prospective homeowners remain optimistic about the current state of the U.S. real estate market. Respondents cite higher home values, increasing housing inventory and low interest rates as the main reasons.
The survey conducted by Berkshire Hathaway HomeServices, part of HSF Affiliates LLC, found that 66 percent of existing homeowners view the U.S. real estate market favorably – a 5-percentage point jump since spring and the highest level in more than a year.
Favorability grew most among baby boomers. To date, boomers have been the most pessimistic group tracked in the ongoing survey, but the latest results show 60 percent of boomers view the housing market favorably, a 6-point increase since spring. They overwhelmingly (72 percent) point to interest rates as the primary reason.
"We find this data particularly interesting in light of the housing-inventory shortage seen in many markets," says Gino Blefari, CEO of Berkshire Hathaway HomeServices. "As homeowners feel increasingly confident about the outlook of housing and their homeownership investments, they are more likely to consider a move for themselves – up, down or laterally to another market. Perhaps this is a signal that more existing homes may gradually come to market freeing up more options for first-time and move-up buyers."
Millennials most optimistic
Among all respondents, millennials are most optimistic about the real estate market and are most satisfied with the U.S. economy: 76 percent of respondents ages 18 to 34 view housing favorably, up a point from last spring and 17 percentage points from November 2015. A large majority of millennials (85 percent) also believe that owning a home is an important part of the "American Dream," a sentiment shared with older generations.
Mortgage rates remain low but how low is up to interpretation. Just 13 percent of millennial respondents described loan rates as "low" while 53 percent categorized them as "average." Additionally, millennials indicated that their biggest challenge in purchasing a home is securing a low mortgage rate.
Gen-Xers said their largest barrier to homeownership is saving money for the purchase, while boomers – in concert with their growing confidence – said their biggest challenge is "finding a home that suits their family's wants and needs."
The possibility of rising mortgage rates remains a concern among all demographic groups surveyed – 81 percent of prospective homebuyers expressed concern about rate increases.
The Homeowner Sentiment Survey also asked renters about their perspectives on homeownership. Many said they've been renting longer than originally planned.
Those renting for a year to three years said their largest challenge is saving money for a downpayment; those renting from three to five years said their primary hurdles include finding a suitable home, trying to save money and getting a good interest rate on a loan; those renting for six years or longer expressed more concern about the U.S. economy.
Besides saving for a downpayment, 37 percent of millennial renters said they're interested in buying only when they're ready to afford their dream home, signaling that they find the concept of a "starter home" less desirable than previous generations.
Renters who said they could not buy a home listed poor credit scores and strict lender guidelines as their principal hurdles.
Presidential race and real estate
With presidential campaigns in high gear, the survey asked respondents which candidate would have a more positive impact on the housing market. Among current homeowners, 33 percent said Donald Trump while 31 percent picked Hillary Clinton. Among prospective homeowners, 35 percent said Clinton would have a more positive impact on housing compared with 27 percent for Trump.
Most Democrats and Republicans surveyed expressed a favorable outlook for the U.S. housing market. Regardless of political affiliation, respondents indicated that credit scores impacted by the recession, stricter lending requirements, and the competitive landscape for available homes are key challenges for the market.
"A much larger percentage of survey respondents admitted they 'don't know' which candidate will be best for real estate," Blefari says.
© 2016 Florida Realtors®. All rights reserved. Reprinted with permission.
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