Home Value Buyers v. Renters! Team Thayer #realestate #housing #sales #market #investing #rental #news #eugene #oregon

American Flag House BHBoth current homeowners and renters agree that home values are going to continue to appreciate. However, the effect of home value appreciation on the confidence of current homeowners in the housing market is quite different when compared with the confidence of renters.
Home values are near or past their pre-crisis peak in about a quarter of U.S. metros, which indicates recovery for these markets—but at the same time, a gap has been forming between renter and homeowner sentiment toward the housing market.
According to Zillow’s latest Housing Confidence Index, released on Thursday, existing homeowners are becoming increasingly confident that now is a good time to sell—in fact, they are generally more positive toward selling than buying. The share of homeowners surveyed who said now is a good time to buy totaled less than 65 percent and has been on the decline for two years; about 70 percent of homeowners said they thought now is a good time to sell. According to the index, the most confident homeowners were concentrated in Western and Southwestern cities.
The imbalance of homeowners being more confident in selling now than in buying is causing a slowdown in many markets, particularly in more expensive urban cores, according to Zillow.
Meanwhile, only 38 percent of renters surveyed said they believe now is a good time to buy. Approximately half of renters surveyed in markets such as San Francisco, New York, Seattle, San Jose, and Boston lacked confidence in their ability to afford a home. Confidence in the housing market among homeowners outpaced the confidence of renters in all metros surveyed.
“The overall health of the housing market looks great at first glance, but dig a bit deeper you’ll find inequality between renters and homeowners,” said Zillow Chief Economist Dr. Svenja Gudell. “Even though the majority of homeowners are confident and believe now is a good time to sell, they’re holding off because they expect home values to continue to appreciate and want to ride the wave. They also don’t want to turn around and become buyers in a competitive market. On the flip side, renters aren’t nearly as confident as homeowners—they’re discouraged by the shrinking number of homes for sale and rapidly rising prices. As housing gets more and more expensive, these trends are not sustainable in the long-run, especially once mortgage rates start to rise.”
About 10,000 renters and homeowners were surveyed as part of the semiannual U.S. Housing Confidence Survey, which is sponsored by Zillow and conducted by Pulsenomics LLC. Those surveyed were asked about the condition of their local real estate market, views on homeownership, and expectations for future home value appreciation and affordability.
“During the past two years, housing confidence has increased in all but two of the metro areas that we study,” said Terry Loebs, founder of Pulsenomics LLC. “Rising home equity levels, healthy housing market expectations among millennials, and resilient homeownership aspirations among minority groups have all been factors in the robust readings of overall U.S. housing confidence. However, within certain metro areas and market segments, key sentiment indicators have begun to fade. Our measure of housing market expectations among residents of the largest and most expensive U.S. cities has actually fallen this year, and within most metro areas, the anxieties of prospective home buyers continue to rise. These and other signals in the ZHCI data suggest that home price appreciation and housing confidence could weaken in the coming months.”
While homeowners remain more confident in the housing market than renters, the Conference Board found that consumers’ confidence in the current economic situation spiked from July to August, from 96.7 up to 101.1 (1985=100). The Present Situation Index jumped from 118.8 to 123.0 during the same period, and the Expectations Index rose from 82.0 to 86.4.
“Consumer confidence improved in August to its highest level in nearly a year, after a marginal decline in July,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ assessment of both current business and labor market conditions was considerably more favorable than last month. Short-term expectations regarding business and employment conditions, as well as personal income prospects, also improved, suggesting the possibility of a moderate pick-up in growth in the coming months.”
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