Home owners in the United States are feeling increasingly confident that now is a good time to sell a home, but renters are feeling uncertain they’ll be able to afford to buy, according to the latest research.
Existing home owners have a more positive attitude toward selling than buying, an imbalance that is causing a slowdown in many markets, especially in the more expensive, urban cores, says the latest housing confidence index report from real estate firm Zillow.
However, less than 65% of home owners surveyed said now is a good time to buy, a number that’s been declining for the past two years and just 38% of renters surveyed said now is a good time to buy a home.
The research also shows that about 50% of renters in San Francisco and New York expressed a lack of confidence in their ability to afford a home in the future. Almost half of the renters surveyed in Seattle, San Jose and Boston had similar feelings.
Meanwhile, confidence among home owners is on the rise, with the most confident home owners concentrated in Western and Southwestern cities. Out of every 10 home owners surveyed, seven said now is a good time to sell a home.
Home values are at or past peak levels in roughly a quarter of US markets, signalling a recovery since the housing bubble bust, but a growing divide between renter and home owner sentiments persists, highlighting two very different trends in the housing market right now.
‘The overall health of the housing market looks great at first glance, but dig a bit deeper you’ll find inequality between renters and home owners. Even though the majority of homeowners are confident and believe now is a good time to sell, they’re holding off because they expect home values to continue to appreciate and want to ride the wave,’ said Zillow chief economist Svenja Gudell.
‘They also don’t want to turn around and become buyers in a competitive market. On the flip side, renters aren’t nearly as confident as home owners and they’re discouraged by the shrinking number of homes for sale and rapidly rising prices. As housing gets more and more expensive, these trends are not sustainable in the long run, especially once mortgage rates start to rise,’ she added.
Housing confidence among home owners continues to exceed that of renters in each of the metro areas surveyed. This gap is smallest in Miami and the largest in Seattle, which has the highest year on year rent appreciation of the 35 largest US metros and rapidly rising home values, up 11% over the past year.
Terry Loebs, the founder of Pulsenomics LLC, pointed out that during the past two years, housing confidence has increased in all but two of the metro areas that the firm studies.
‘Rising home equity levels, healthy housing market expectations among millennials, and resilient homeownership aspirations among minority groups have all been factors in the robust readings of overall US housing confidence,’ he said.
‘However, within certain metro areas and market segments, key sentiment indicators have begun to fade. Our measure of housing market expectations among residents of the largest and most expensive US cities has actually fallen this year, and within most metro areas, the anxieties of prospective home buyers continue to rise. These and other signals in the data suggest that home price appreciation and housing confidence could weaken in the coming months,’ he added.