Renter, Buyer, Seller Sentiments Shifting
Volatility is the byword of the housing market these days. And home buyers, sellers and renters are adjusting accordingly.
A recent Fannie Mae housing sentiment survey fell by nearly three points in December, as more Americans felt less comfortable about buying a home. Fannie Mae attributed the decrease primarily to a 12-percentage point decrease in the net share of Americans who said it is a good time to buy a home, to 11 percent, a new survey low.
And a new report from Trulia, San Francisco (https://www.trulia.com/research/2019-housing-sentiment/), suggests market participants know what they want (or need) to do next.
“Last year marked a break from the unrelenting and accelerating home price growth that characterized the market for several years straight–growth fueled by high demand, limited inventory and cheap financing,” wrote Trulia Senior Economist Cheryl Young. “But while that break may ultimately prove beneficial to some, the shifting dynamics seem to be giving many buyers, sellers and renters pause as we enter a new year: Younger would-be buyers are more pessimistic on the value of homeownership; financial obstacles are proving stubborn to overcome; and sellers are less bullish.”
Young added the share of young Americans that say homeownership is part of their personal “American Dream” is falling, likely driven lower by increasing housing costs and a series of obstacles–from student loan debt to unsteady employment-“that their older peers don’t have to contend with.”
Trulia commissioned a survey, conducted online by The Harris Poll, of more than 2,000 U.S. adults. Key findings:
–Americans still dream of owning their own homes, although the dream is faltering for younger adults. After two years of no change, the share of Americans who say that homeownership is part of their personal “American Dream” ticked up from 72% (in 2017 and 2016) to 73% of Americans. But the share dropped among 18-to-34 year-olds, to 71%, down from an all-time high of 80% in 2015.
–Money continues to be the biggest obstacle to homeownership. Entering the housing market is rife with barriers, and saving for a down payment (53%) and rising home prices (36%) are top-of-mind for renters who wish to buy.
–Americans less optimistic as home price appreciation slows. The gap between those saying it will be better and those who think it will be worse to sell in 2019 compared to 2018 was cut in half, as market conditions begin to favor buyers after years of seller control. In fact, of Americans who plan to buy a home, 40% intend to buy in the next two years (by the end of 2020), up from 33% a year ago.
–Fear of possible wildfires, hurricanes, tornados and floods likely not deterring home buying. The increased cadence of natural disasters does not appear to concern most Americans, with 52% reporting that they are no more or less concerned about the potential threat of a natural disaster affecting their home.
The survey found just 29 percent of Americans said they believe 2019 will be a better year to sell than 2018, compared to 21 percent who said next year will be worse than 2018. But when asked the same question last year, Americans were much more bullish on selling: 31 percent said this year would be better than last, versus just 14 percent who felt it would be worse, a gap of 17 percentage points. In other words, in just one year, the gap between the seller bulls and seller bears was cut in half.
Americans are no more optimistic when it comes to buying a home, either. More respondents said they thought 2019 would be worse for buying than 2018 (28 percent) than those who said this year will be a better buyer year than last (25 percent). The share of those saying it would be a better year was flat compared to a year ago, while the share of those saying 2019 would be worse for buyers was up 3 percentage points.
“It’s clear the changes happening in the U.S. housing market are giving buyers, renters and sellers pause,” Young said. “After several years of frenzy thanks to tight inventory, rapidly rising home prices and record-low mortgage rates, 2018 marked a turning point. Signs of cooling have been observed in major housing markets across the country. Many will likely hold off from buying and selling in 2019 to wait and see what happens.”
