Real Estate Market Outlook Surges Amid Strong Demand
First American Financial Corp., Santa Ana, Calif, said Millennial demand and positive economic conditions continue to fuel quarterly increase in confidence in the real estate market.
The company’s quarterly Real Estate Sentiment Index reported overall confidence for transaction volume growth over the next 12 months increased by 9.1 percent from the first quarter, but decreased by 4.8 percent from a year ago. Confidence for growth in purchase transaction volume increased by 2.7 percent from last quarter and fell by 1.1 percent from a year ago. Confidence in refinance transaction volume growth increased by 18.5 percent from last quarter and fell by 9.1 percent from a year ago.
As a further incentive to buyers, the Index said prices across all property types are expected to drop by a modest 0.18 percentage points over the next 12 months compared to the first quarter.
“Overall, confidence among title agents and real estate professionals in transaction volume growth in the coming year swelled this quarter,” said First American Chief Economist Mark Fleming. “The increase was driven by the rise in expectations for both purchase transactions and refinance transactions amid persistent low mortgage rates.”
Fleming said stronger Millennial demand and continued positive economic conditions are key factors in projected growth, with Millennials accounting for 87 percent of first-time buyers.
“In contrast to the perception that Millennials are eschewing homeownership for the ease and flexibility of renting, this quarter’s survey provided more evidence that Millennials are increasingly participating in the housing market,” Fleming said. “Millennials are making the choice to own primarily based on the desire to improve their financial situation and to accommodate having children. Like generations before them, saving for the down payment is the biggest obstacle. When Millennials buy a home may be different, but why Millennials buy homes is arguably the same as it’s always been.”
Fleming cautioned, however, that widespread tight supply is causing a dilemma in the market, as homeowners balance the benefit of selling their home in today’s sellers’ market with the risk of becoming a buyer in the sellers’ market.
Other report highlights:
–States with the greatest increase in title agent and real estate professional confidence for residential purchase transaction volume growth as compared with a year ago were Louisiana (+24.1 percent), Texas (+15.6 percent), New York (+12.9 percent), Missouri (+11.4 percent) and Tennessee (+9.7 percent).
–States with the greatest increase in confidence for multifamily purchase transaction volume growth as compared with a year ago were New Mexico (+66.7 percent), Louisiana (+58.7 percent), Colorado (+53.1 percent), Mississippi (+50.0 percent) and Oregon (+40.0 percent).
–States with the highest predictions for residential price growth in the coming year were Kentucky (+8.6 percent), Washington (+8.0 percent), Michigan (+6.1 percent), Maryland (+6.0 percent) and New York (+5.8 percent).
–States with the highest predictions for multifamily property price growth in the coming year were Kentucky (+5.9 percent), Maryland (+5.8 percent), Washington (+5.8 percent), Colorado (+5.4 percent) and New York (+4.9 percent).
