Real Estate Pros Still See Positive Long-Term Housing Outlook
First American Financial Corp., Santa Ana, Calif., said overall optimism among title insurance agents and real estate professionals declined slightly in the first quarter, but optimism for growth in purchase transaction volume increased from previous surveys.
The company’s quarterly Real Estate Sentiment Index also noted transaction professionals do not believe recent changes to the tax code will have any real impact on the market.
The index reported overall, confidence in transaction volume growth over the next 12 months decreased by 0.2 percent from the fourth quarter, but increased by 4.1 percent compared with a year ago. Confidence in purchase transaction volume growth over the next 12 months increased 6.2 percent from last quarter and by 0.2 percent from a year ago. Confidence in refinance transaction volume growth over the next 12 months decreased by 7.8 percent from last quarter, but increased 9.9 percent year over year.
The report said transaction professionals expect prices across all property types to increase by 0.3 percent over the next 12 months as compared with last quarter.
“Overall, optimism among title insurance agents and real estate professionals decreased slightly this quarter, likely because they indicated refinance transaction volume is expected to fall in the coming year,” said First American Chief Economist Mark Fleming. “However, optimism for growth in purchase transaction volume increased compared with a year ago. Increasing mortgage rates clearly impacted optimism for the refinance market, but despite this, optimism remains strong for increased purchase demand.”
The report said title agents and real estate professionals slightly leaned toward the opinion that the new tax code would not negatively impact house appreciation, but responses were split relatively equally. Of the respondents, 27 percent believe that the tax code could negatively impact house price appreciation, 35 percent believe it will not do so, 35 percent were neutral.
“This split opinion may be due to the fact that expensive markets with higher priced homes are more likely to be impacted by the new tax law because of the limit on the deductibility of state and local property taxes,” Fleming said. “Indeed, survey respondents in areas with high housing costs, such as Washington D.C., California and New York, were more likely than others to agree that the new tax code would negatively impact house price appreciation.”
The report said states with the greatest increase in title agent and real estate professional confidence in residential purchase transaction volume growth as compared with a year ago are Kentucky (+50.0 percent), West Virginia (+40.0 percent), Maryland (+31.3 percent), Arizona (+27.4 percent) and Texas (+24.3 percent). States with the greatest increase in confidence in multi-family purchase transaction volume growth are Utah (+73.3 percent), Arkansas (+35.0 percent), Montana (+33.8 percent), Kentucky (+30.0 percent) and Oklahoma (+28.3 percent).
