Renters are taking a dimmer view of home ownership as concerns over housing affordability and student debt have a larger influence on their attitudes, according to the National Association of REALTORS®.
NAR’s latest Housing Opportunities and Market Experience (HOME) survey found a growing disconnect in the morale among home owners versus renters about home ownership. The share of renters who think now is a good time to buy a home dropped to 62 percent in the second quarter of this year — down from 68 percent in December 2015 — with those under the age of 35 expressing the least amount of confidence in buying. Eighty percent of home owners, on the other hand, believe now is a great time to purchase a home.
“Existing-home prices surpassed their all-time peak this spring and have climbed, on average, over 5 percent nationally through the first five months of the year — and even faster in areas with severe supply shortages,” says NAR Chief Economist Lawrence Yun. “Most home owners appear to realize that if they’re ready to sell, they’ll likely find a buyer rather quickly and be able to use the sizeable equity they’ve accumulated in recent years towards their next home purchase. Meanwhile, renters interested in buying continue to face minimal choices, strong competition, and home prices growing faster than their incomes. … Given these affordability pressures, it’s no surprise respondents earning over $100,000 and those living in the Midwest — the most affordable region of the country — are the most optimistic about buying right now.”
Student debt is making many people uneasy about taking on additional debt to purchase a home. Two-thirds of non-home owners and half of those under 35 with student debt say they aren’t comfortable adding a mortgage on to their debt load, according to the HOME survey. They also were less likely to believe they’d even qualify for a mortgage.
“It’s becoming very evident from this survey and our research released last month that the financial and emotional impact of repaying student debt is contributing to a delay in purchasing a home for many would-be buyers,” Yun says. “At a time of quickly rising rents, mortgage rates at all-time lows, and increasing housing wealth, a lot of young adults in their prime buying years are struggling to enter the market and are ultimately missing out on the stability and wealth accumulation that owning a home can provide.”
Economists are predicting that strong home-price appreciation will continue in the coming months throughout most of the country. As such, a growing number of current home owners — 61 percent — say they believe it’s a good time to sell compared to 56 percent who said so in the first quarter of this year. Survey respondents who live in the West were most likely to say now is a good time to sell but were also least likely to say now is a good time to buy, according to the survey.
“More home owners acknowledging this pent-up demand may perhaps mean we begin to see more supply come online in the near future,” Yun says.
Source: National Association of REALTORS®