Homeowner Confidence High, But Buyers Feel Discouraged by the Housing Market
The majority of renters are eager to become homeowners, but with rising home prices and low supply, few believe they can.
- Homeowners are confident about the current state of the housing market, and the majority believe now is a good time to sell a home.
- Renters are less confident than homeowners, expressing concern over their ability to afford a home in the future.
- The most confident homeowners are concentrated in Western and Southwestern cities, like Seattle and Dallas, which also have the least confident renters.
- Overall U.S. housing confidence inched up in July to 67.3, up 0.4 from January 2016.
Sep 1, 2016
SEATTLE, Sept. 1, 2016 /PRNewswire/ -- Homeowners 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 Zillow® Housing Confidence Index (ZHCI)i.
Existing homeowners 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. Less than 65 percent of homeowners surveyed said now is a good time to buy, a number that's been declining for the past two years.
Just 38 percent of renters surveyed said now is a good time to buy a home and about 50 percent 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 homeowners is on the rise, with the most confident homeowners concentrated in Western and Southwestern cities. Out of every 10 homeowners 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 U.S. markets, signaling a recovery since the housing bubble bust, but a growing divide between renter and homeowner 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 homeowners," said Zillow Chief Economist Dr. Svenja Gudell. "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. 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 homeowners -- 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."
The semi-annual U.S. Housing Confidence Survey (HCS), sponsored by Zillow and conducted by Pulsenomics LLC, asks 10,000 renters and homeowners about the condition of their local real estate market, their expectations for home value growth and affordability in the future, and their views on homeownership.
Housing confidence among homeowners continues to exceed that of renters in each of the metro areas surveyed. This gap is smallest in Miami and largest in Seattle, which has the highest year-over-year rent appreciation of the 35 largest U.S. metros and rapidly rising home values, up 11 percent over the past year.
"During the past two years, housing confidence has increased in all but two of the metro areas that we study," said Terry Loebs, the founder of Pulsenomics LLC. "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 U.S. housing confidence. 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 U.S. 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 ZHCI data suggest that home price appreciation and housing confidence could weaken in the coming months."
Zillow® is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Zillow also sponsors the bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ: Z and ZG), and headquartered in Seattle.
Zillow is a registered trademark of Zillow, Inc.
Pulsenomics LLC is an independent research and consulting firm that specializes in data analytics, new product and index development for institutional clients in the financial and real estate arenas. Pulsenomics also designs and manages expert surveys and consumer polls to identify trends and expectations that are relevant to effective business management and monitoring economic health. Pulsenomics LLC is the author of The Home Price Expectations Survey™, The U.S. Housing Confidence Survey, and The U.S. Housing Confidence Index. Pulsenomics®, The Housing Confidence Index™, and The Housing Confidence Survey™ are trademarks of Pulsenomics LLC.
i The ZHCI is computed by Pulsenomics from data compiled by the Zillow-sponsored U.S. Housing Confidence Survey (HCS), consisting of more than 10,000 completed household interviews with adult landline and cellphone users nationwide. ZHCI is a diffusion index measured on a 100-point scale, with readings above 50 indicating a surplus of confidence in the housing market. This edition of the ZHCI is derived from data collected in the July 2016 edition of the HCS, conducted between July 6 and July 14, 2016. At a 95% confidence interval, the theoretical margin of sampling error for an aggregated, household-weighted sample of 10,000 (comprised of 20 metro-level probability samples of 500 each) is +/- 1.2%, and larger for sub-groups (e.g., +/- 1.5% for all homeowner households, and +/- 2.0% for all renter households). More than 350,000 consumer responses pertaining to the real estate market where each survey respondent lives are recorded by Pulsenomics to produce each edition of the ZHCI. To view or download all 252 index values that comprise each edition of the ZHCI data set, or to learn more about the ZHCI calculation methodology, please visit Zillow.com/research or pulsenomics.com.
For further information: Jordyn Lee, Zillow, firstname.lastname@example.org