HOME Survey: Economic and Financial Outlook, Attitudes About Home Buying and Selling on the Rise

Washington, D.C. – September 25, 2017 (nar.realtor) Existing-homes sales have retreated in four of the past five months, but new survey findings from the National Association of Realtors® indicate it is not because of a lack of confidence from consumers about buying and selling a home, or based on their views about the direction of the economy and their finances.

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That’s according to NAR’s third quarter Housing Opportunities and Market Experience (HOME) survey(1) , which also found that two-thirds of households think saving for a down payment is challenging, and roughly half of renters expect to pay more in rent next year.

This quarter, there appears to be a revival from renters that now is a good time to buy a home. After dipping to roughly half of renters last quarter (52 percent), the share who believe now is a good time climbed to 62 percent (60 percent a year ago). Overall, current homeowners (80 percent), households with higher incomes and those living in the more affordable Midwest and South regions are the most optimistic about buying right now.

Amidst the steady gains in home values seen in many parts of the country, the share of homeowners that believe now is a good time to sell is also inching higher. Eighty percent of homeowners think now is a good time to list their home for sale (a new survey high), which is up from last quarter (75 percent) and even more so than a year ago (67 percent).

Lawrence Yun, NAR chief economist, says it is great news that homebuyer and seller optimism is advancing, but it remains unclear if it will actually translate to more sales. “The housing market has been in a funk since early spring because of the ongoing scarcity of new and existing homes for sale,” he said. “The pace of new home construction has not meaningfully broken out this year, and not enough homeowners at this point have followed through with their belief that now is a good time to sell. As a result, home shoppers have seen limited options, stiff competition and weakening affordability conditions.”

Added Yun, “Buyer demand is robust this fall, but the disappointing reality is that sales will continue to undershoot their full potential until supply levels significantly improve.”

Economic and financial outlook brightens

More households this quarter (57 percent) believe the economy is improving compared to the second quarter (54 percent) and a year ago (48 percent). Continuing the complete reversal from a year ago, those living in rural and suburban areas were more optimistic about the economy than respondents residing in urban areas. A majority of homeowners and those with incomes above $50,000 also had a positive outlook on the economy.

The rebound in economic confidence this quarter are also giving households increased assurances about their financial situation. The HOME survey’s monthly Personal Financial Outlook Index2, showing respondents’ confidence that their financial situation will be better in six months, jumped from 57.2 in June to 62.0 in September. A year ago, the index was 58.6.

“Jobs are plentiful, wage growth is finally showing signs of life, home values are up considerably in the past five years and the stock market is at record highs,” said Yun. “The economy is not perfect, and growth overall is still sluggish, but the financial health of the typical household looks as healthy as it has since the recession.”

Most renters likely to continue renting – even if their rent increases

This quarter, non-homeowners were asked if they expect their rent to increase over the next year, and given their current financial situation, what impact paying more in rent would have on their living arrangements.

Roughly half of current renters expect to pay more in rent next year (51 percent). If in fact their rent does increase, most will either resign their lease anyway (42 percent) or move to a cheaper rental. Only 15 percent of respondents will consider buying a home.

“Even though the typical down payment of a first-time buyer has been 6 percent for three straight years, two-thirds of respondents indicated that saving for one is difficult right now,” said Yun. “Rents and home prices have outpaced incomes in the past few years, and this is undoubtedly impacting their ability to put aside savings for a home purchase, even if they increasingly believe it’s a good time to buy. Heading into next year, higher home prices and limited inventory in the affordable price range will likely continue to hold back a share of renters who would prefer to be homeowners.”

About NAR’s HOME survey
In July through early September, a sample of U.S. households was surveyed via random-digit dial, including a mix of cell phones and land lines. The survey was conducted by an established survey research firm, TechnoMetrica Market Intelligence. Each month approximately 900 qualified households responded to the survey. The data was compiled for this report and a total of 2,709 household responses are represented.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

# # #

1. NAR’s Housing Opportunities and Market Experience (HOME) survey tracks topical real estate trends, including current renters and homeowners’ views and aspirations regarding homeownership, whether or not it’s a good time to buy or sell a home, and expectations and experiences in the mortgage market. New questions are added to the survey each quarter to reflect timely topics impacting real estate.

HOME survey data is collected on a monthly basis and will be reported each quarter. New questions will be added to the survey each quarter to reflect timely topics impacting the real estate marketplace. The next release is scheduled for Monday, June 12, 2017 at 10:00 a.m. ET.

2. Index ranges between 0 and 100: 0 = all respondents believe their personal financial situation will be worse in 6 months; 50 = all respondents believe their personal financial situation will be about the same in 6 months; 100 = all respondents believe their personal situation will be better in 6 months.

Media Contact:

Adam DeSanctis
(202) 383-1178
Email

71 Percent of Homeowners Believe It’s a Good Time to Sell; Economic and Financial Confidence Dips: Realtors® HOME Survey

Washington, D.C. – June 26, 2017 (nar.realtor) Existing housing inventory has declined year over year each month for two straight years, but new consumer findings from the National Association of Realtors® offer hope that the growing number of homeowners who think now is a good time to sell will eventually lead to more listings.

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That’s according to NAR’s quarterly Housing Opportunities and Market Experience (HOME) survey(1), which also found that fewer renters think it’s a good time to buy a home, and respondents are less confident about the economy and their financial situation than earlier this year despite continuous job gains.

One trend gaining steam in the HOME survey is an increased share of homeowners who believe now is a good time to sell their home. This quarter, 71 percent of homeowners think now is a good time to sell, which is up from last quarter (69 percent) and considerably more than a year ago (61 percent). Respondents in the Midwest (76 percent) surpassed the West (72 percent) for the first time this quarter to be the most likely to think now is a good time to sell.

Lawrence Yun, NAR chief economist, says it’s apparent there’s a mismatch between homeowners’ confidence in selling and actually following through and listing their home for sale. “There are just not enough homeowners deciding to sell because they’re either content where they are, holding off until they build more equity, or hesitant seeing as it will be difficult to find an affordable home to buy,” he said. “As a result, inventory conditions have worsened and are restricting sales from breaking out while contributing to price appreciation that remains far above income growth.”

Added Yun, “Perhaps this notable uptick in seller confidence will translate to more added inventory later this year. Low housing turnover is one of the roots of the ongoing supply and affordability problems plaguing many markets.”

On the decline: renter morale about buying a home and financial and economic optimism

Confidence among renters that now is a good time to buy a home continues to retreat. Fifty-two percent of renters think now is a good time to buy, which is down both from last quarter (56 percent) and a year ago (62 percent). Conversely, 80 percent of homeowners (unchanged from last quarter and a year ago) think now is a good time to make a home purchase. Younger households, and those living in urban areas and in the costlier West region are the least optimistic.

The surge in economic optimism seen in the first quarter of the year appears to be short lived. The share of households believing the economy is improving fell to 54 percent in the second quarter after soaring to a survey high of 62 percent last quarter. Homeowners, and those living in the Midwest and in rural and suburban areas are the most optimistic about the economy. Only 42 percent of urban respondents believe the economy is improving, which is a drastic decrease from the 58 percent a year ago.

Dimming confidence about the economy’s direction is also leading households to not have as strong feelings about their financial situation. The HOME survey’s monthly Personal Financial Outlook Index(2) showing respondents’ confidence that their financial situation will be better in six months fell to 57.2 in June after jumping in March to its highest reading in the survey. A year ago, the index was 57.7.

“It should come as little surprise that the confidence reading among renters has fallen every month since January (64.8) and currently sits at its lowest level (53.8) since tracking began in March 2015 (65.7),” said Yun. “Paying more in rent each year and seeing home prices outpace their incomes is discouraging, and it’s unfortunately pushing home ownership further away — especially for those living in expensive metro areas on the East and West Coast.”

Under half of respondents believe homes are affordable for most buyers; one in five would consider moving

In this quarter’s survey, respondents were also asked about the affordability of homes in their communities. Overall, only 42 percent of respondents believe they are affordable for almost all buyers, with those living in the Midwest being the most likely to believe homes are affordable (55 percent) — and not surprisingly — West respondents (29 percent) being least likely to think homes are affordable.

Additionally, 20 percent of respondents would consider moving to another more affordable community. Those earning under $50,000 annually (27 percent) and those age 34 and under (29 percent) were the most likely to indicate they would consider moving.

“Areas with strong job markets but high home prices risk a migration of middle-class households to other parts of the country if rising housing costs in those areas are not contained through a significant ramp-up in new home construction,” said Yun.

About NAR’s HOME survey
In April through early June, a sample of U.S. households was surveyed via random-digit dial, including a mix of cell phones and land lines. The survey was conducted by an established survey research firm, TechnoMetrica Market Intelligence. Each month approximately 900 qualified households responded to the survey. The data was compiled for this report and a total of 2,711 household responses are represented.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

# # #

1. NAR’s Housing Opportunities and Market Experience (HOME) survey tracks topical real estate trends, including current renters and homeowners’ views and aspirations regarding homeownership, whether or not it’s a good time to buy or sell a home, and expectations and experiences in the mortgage market. New questions are added to the survey each quarter to reflect timely topics impacting real estate.

HOME survey data is collected on a monthly basis and will be reported each quarter. New questions will be added to the survey each quarter to reflect timely topics impacting the real estate marketplace. The next release is scheduled for Monday, June 12, 2017 at 10:00 a.m. ET.

2. Index ranges between 0 and 100: 0 = all respondents believe their personal financial situation will be worse in 6 months; 50 = all respondents believe their personal financial situation will be about the same in 6 months; 100 = all respondents believe their personal situation will be better in 6 months.

Media Contact:

Adam DeSanctis
(202) 383-1178
Email

Mortgage Payments are Unaffordable in Half of America’s Largest Markets

– Homes for sale in the six largest California metros have unaffordable mortgage payments

– The median price of homes for sale is higher than the median home value of all homes in all but three of the largest 35 U.S. metros.

– Monthly mortgage payments on for-sale homes in Los Angeles require 46.8 percent of the median income.

– Monthly payments for the median-valued U.S. home require 16 percent of the median income.

Seattle, WA – June 9, 2017 (PRNewswire) Buying the typical home listed for sale in more than half of the nation’s 35 largest markets will require a greater share of income than the median-valued home required historically, according to a new Zillow® analysis(i).

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One reason this home shopping season is so difficult for buyers is that the homes available for sale are generally more expensive than the median home value of all homes in the same market.

As home prices recovered and surpassed the peak values reached during the housing bubble, concerns about housing affordability also returned, despite low mortgage rates keeping monthly payments relatively affordable. The large down payments that come with high prices are a significant barrier to homeownership, and the monthly payments are taking up a larger share of income as well.

Nationally, mortgage payments on the median home for sale require 20 percent of the median income.

“Homes have gotten so expensive in many major cities that even with low mortgage rates, monthly costs for homes that are currently for sale are starting to be unaffordable,” said Zillow Chief Economist Dr. Svenja Gudell. “Down payments are a top concern for today’s homebuyers, but the reality is that monthly costs are becoming unaffordable as well. Low inventory is pushing sticker prices higher, and when mortgage rates start to rise, monthly payments will be driven further into unaffordable territory.”

Los Angeles homebuyers have to spend the highest share of income on mortgage payments – the typical home for sale would require 46.8 percent of the median income. In the years leading up to the housing bubble, Los Angeles homebuyers would have had to spend 35.2 percent of their income on mortgage payments for the typical home.

Cleveland homes for sale are more affordable than homes were historically. The median list price of about $144,000 would require 12.7 percent of the median income for monthly mortgage payments. In pre-bubble years, paying the mortgage on the typical Cleveland home required 20 percent of the median income.
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Zillow

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. 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.

(i) For mortgage affordability, Zillow assumed a 20 percent down payment and a 30-year, fixed-rate mortgage at prevailing mortgage rates pulled from the Primary Mortgage Market Survey® provided by Freddie Mac. We considered the median value of all homes in a given market – even those not listed for sale – and the median price of those actually listed for sale.

5 Root Causes for U.S.’s Depressed Homeownership Rate: New Study

Berkeley, CA – June 9, 2017 (nar.realtor) Despite steadily improving local job markets and historically low mortgage rates, the U.S. homeownership rate is stuck near a 50-year low because of a perverse mix of affordability challenges, student loan debt, tight credit conditions and housing supply shortages.

That’s according to findings of a new white paper titled, “Hurdles to Homeownership: Understanding the Barriers” (link is external) released today in recognition of National Homeownership Month at the National Association of Realtors® Sustainable Homeownership Conference at University of California, Berkeley.

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Led by a group of prominent experts, including NAR 2017 President William E. Brown, NAR Chief Economist Lawrence Yun and Berkeley Hass Real Estate Group Chair Ken Rosen, today’s conference addresses the dip and idleness in the homeownership rate, its drag on the economy and what can be done to ensure more creditworthy households have the opportunity to buy a home.

“The decline and stagnation in the homeownership rate is a trend that’s pointing in the wrong direction, and must be reversed given the many benefits of homeownership to individuals, communities and the nation’s economy,” said Brown, a Realtor® from Alamo, California. “Those who are financially capable and willing to assume the responsibilities of owning a home should have the opportunity to pursue that dream.” One of Brown’s main objectives as president of NAR is identifying ways to boost the homeownership rate in a safe and responsible way.

The research, which was commissioned by NAR, prepared by Rosen Consulting Group, or RCG, and jointly released by the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley Haas School of Business, identifies five main barriers that have prevented a significant number of households from purchasing a home. They are:

Post-foreclosure stress disorder: There are long-lasting psychological changes in financial decision-making, including housing tenure choice, for the 9 million homeowners who experienced foreclosure, the 8.7 million people who lost their jobs, and some young adults who witnessed the hardships of their family and friends. While most Americans still have positive feelings about homeownership, targeted programs and workshops about financial literacy and mortgage debt could help return-buyers and those who may have negative biases about owning.

Mortgage availability: Credit standards have not normalized following the Great Recession. Borrowers with good-to-excellent credit scores are not getting approved at the rate they were in 2003, prior to the period of excessively lax lending standards. Safely restoring lending requirements to accessible standards is key to helping creditworthy households purchase homes.

The growing burden of student loan debt: Young households are repaying an increasing level of student loan debt that makes it extremely difficult to save for a down payment, qualify for a mortgage and afford a mortgage payment, especially in areas with high rents and home prices. As NAR found in a survey released last year, student loan debt is delaying purchases from millennials and over half expect to be delayed by at least five years. Policy changes need to be enacted that address soaring tuition costs and make repayment less burdensome.

Single-family housing affordability: Lack of inventory, higher rents and home prices, difficulty saving for a down payment and investors weighing on supply levels by scooping up single-family homes have all lead to many markets experiencing decaying affordability conditions. Unless these challenges subside, RCG forecasts that affordability will fall by an average of nearly 9 percentage points across all 75 major markets between 2016 and 2019, with approximately 5 million fewer households able to afford the local median-priced home by 2019. Declining affordability needs to be addressed with policies enacted that ensure creditworthy young households and minority groups have the opportunity to own a home.

Single-family housing supply shortages: “Single-family home construction plummeted after the recession and is still failing to keep up with demand as cities see increased migration and population as the result of faster job growth,” said Rosen. “The insufficient level of homebuilding has created a cumulative deficit of nearly 3.7 million new homes over the last eight years.”

Fewer property lots at higher prices, difficulty finding skilled labor and higher construction costs are among the reasons cited by RCG for why housing starts are not ramping up to meet the growing demand for new supply. A concentrated effort to combat these obstacles is needed to increase building, alleviate supply shortages and preserve affordability for prospective buyers.

“Low mortgage rates and a healthy job market for college-educated adults should have translated to more home sales and upward movement in the homeownership rate in recent years,” said Yun. “Sadly, this has not been the case. Obtaining a mortgage has been tough for those with good credit, savings for a down payment are instead going towards steeper rents and student loans, and first-time buyers are finding that listings in their price range are severely inadequate.”

Added Rosen, “A healthy housing market is critical to the overall success of the U.S. economy. Too many would-be buyers have been locked out of the market by the factors found in this study, and it’s also one of the biggest reasons why economic growth has been subpar in the current recovery.”

Today’s homeownership event in Berkeley brings together leading housing economists, policy experts, real estate practitioners and public officials to discuss current market conditions, housing policy, improving access to credit, affordable housing options and inequality.

Along with Brown, Yun and Rosen, the notable list of speakers are: Katherine Baker, California State Assembly, 16th district; Matt Regan, senior vice president of public policy, Bay Area Council; Chuck Reed, former San Jose Mayor and special counsel, Hopkins & Carley; David Bank, senior vice president, Rosen Consulting Group; and Jim Gaines, chief economist, Texas A&M University Real Estate Center;

Additional speakers are Joel Singer, CEO and state secretary, California Association of Realtors®; Nancy Wallace, co-chair, Fisher Center for Real Estate & Urban Economics and professor, UC Berkeley Haas School of Business; Laurie Goodman, co-director, Housing Finance Policy Center, Urban Institute; Carol Galante, I. Donald Terner Distinguished Professor of Affordable Housing and Urban Policy; faculty director, Terner Center for Housing Innovation; Co-Chair of Fisher Center for Real Estate and Urban Economics; and former FHA Commissioner; John C. Weicher, director, Center for Housing and Financial Markets at the Hudson Institute, and former FHA Commissioner.

Hurdles to Homeownership: Understanding the Barriers (link is external)” is the second of three papers scheduled for release in 2017 by RCG. Among the findings of the first white paper, “Homeownership in Crisis: Where Are We Now? (link is external),” released earlier this year, RCG estimated that more than $300 billion would have been added to the economy in 2016, representing a 1.8 percent bump to GDP, if homebuilding returned to a more normalized level consistent with the historical trend. The third paper – published later this year – will highlight a series of creative policy ideas to promote safe, affordable and sustainable homeownership opportunities.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing over 1.2 million members involved in all aspects of the residential and commercial real estate industries.

Media Contact:

Adam DeSanctis
(202) 383-1178
Email

Increased U.S. housing activity, improved economic conditions on the horizon

Falling delinquency and foreclosure rates indicate a more sustainable U.S. housing market

Columbus, OH – June 21, 2016 (PRNewswire) With continued strength in the job market and solid gains in house prices, there has been a meaningful drop in mortgage delinquencies and foreclosures in the U.S. Steady employment gains mean most Americans are able to meet their mortgage obligations, while house price gains have helped reduce the number of underwater mortgages – leading to lower default rates and a healthy outlook for the housing market in the next year, according to the latest housing market barometer released today by Nationwide, a leading insurance and financial services organization.

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The forward-looking Health of Housing Markets Report (HoHM Report) evaluates the housing health for the U.S. and 400 metropolitan statistical areas (MSAs). This quarter’s HoHM Report shows serious delinquency rates in nearly all MSAs are trending down toward pre-housing bust levels. As mortgage market conditions steadily improve, housing is expected to remain a bright spot in the U.S. economy.

Movements in serious delinquencies – defined as homes in foreclosures plus greater than 90-day delinquencies – serve as a leading indicator for overall housing market health among buyers, sellers, and builders. Falling rates across the country bode well for continued health and sustainability throughout most housing markets in the U.S. over the next year.

“We are seeing positive signals for homeowners, as well as local economies, in most metro areas,” said David W. Berson, Nationwide’s senior vice president and chief economist. “The drop in serious mortgage delinquency rates supports sustainable home price gains and housing activity. The more sustainable housing markets should allow for positive feedback loops in local economies, with strengthening job and income gains for residential real estate agents, mortgage bankers and home improvement workers.”

The report also indicates that:

  • The vast majority of metro areas across the country are healthy, indicating that few regional housing markets are vulnerable to a housing downturn in the near term – except those in energy-intensive regions or where house price gains are substantially above long-term trends.
  • The energy sector slowdown is weighing heavily on job growth and housing sustainability in certain areas, including portions of Texas, North Dakota, Wyoming and Louisiana. MSAs in these states comprise the entire bottom 10 performance rankings list.
  • Texas is among the least sustainable states in the country right now, with nearly all MSAs rated as negative or neutral due to oil price declines or overheated markets.
  • Major MSAs within the top 50 include: Oklahoma City, Okla., Cleveland, Milwaukee and Chicago; meanwhile, three of the top 40 MSAs by size lie just outside the bottom 10: Houston, Seattle and New Orleans.

The Top 10 MSAs in the index are, in order: Harrisburg-Carlisle, Pa.; Saginaw, Mich.; Lansing-East Lansing, Mich.; Memphis, Tenn.-Miss-Ark.; Manhattan, Kan.; California-Lexington Park, Md.; Bloomsburg-Berwick, Pa.; Macon, Ga.; Midland, Mich.; Baltimore-Columbia-Towson, Md.

The Bottom 10 MSAs, in order, are: Bismarck, N.D.; Casper, Wyo.; San Angelo, Texas; Midland, Texas; Austin-Round Rock, Texas; Waco, Texas; Laredo, Texas; College Station-Bryan, Texas; Dallas-Plano-Irving, Texas; Victoria, Texas

Showing the most improvement in the past year, in order, are: Manhattan, Kan.; Ithaca, N.Y.; Monroe, La.; Roanoke, Va.; Texarkana, Texas-Ark.; Bloomsburg-Berwick, Pa.; California-Lexington Park, Md.; Ocean City, N.J.; Kingston, N.Y.; Alexandria, La.

Weakening the most in the past year, in order, are: Casper, Wyo.; Midland, Texas; Grand Forks, N.D.-Minn.; Lawton, Okla.; Waco, Texas; Peoria, Ill.; College Station-Bryan, Texas; Omaha-Council Bluffs, Neb.-Iowa; Bloomington, Ill.; Anchorage, Alaska

More information about the HoHM Report, including the methodology used, can be found at www.inthenation.com/housing. The HoHM Report is released on a quarterly basis online and in print.

About Nationwide

Nationwide, a Fortune 100 company based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the U.S. and is rated A+ by both A.M. Best and Standard & Poor’s. The company provides a full range of insurance and financial services, including auto, commercial, homeowners, farm and life insurance; public and private sector retirement plans, annuities and mutual funds; banking and mortgages; pet, motorcycle and boat insurance. For more information, visit www.nationwide.com.

Nationwide, Nationwide is on your side and the Nationwide N and Eagle are service marks of Nationwide Mutual Insurance Company.

Contact:

Jeff Whetzel
(614) 249-6354
whetzej@nationwide.com

Haley Fry
(312) 552-1133
Haley.Fry@edelman.com