Over three-quarters of surveyed households would purchase a single-family home if they were to buy in the next six months, according to the National Association of REALTORS® new quarterly consumer survey. This and other findings call attention to the glaring need for more supply of single-family homes, according to REALTOR® officials. Moreover, buyers still prefer larger homes in suburban areas close to urban centers.
NAR's first quarter Housing Opportunities and Market Experience (HOME) survey data reveals an overwhelming consumer preference for single-family homes in suburban areas. Most current homeowners (85 percent) and 75 percent of renters said they would purchase a single-family home, while only 15 percent of homeowners and 21 percent of renters said that would buy in an urban area.
Lawrence Yun, chief economist for NAR, says the survey findings call attention to the glaring need for more supply of single-family homes. "The American Dream for most consumers is not a cramped, 500-square-foot condo in the middle of the city, but instead a larger home within close proximity to the jobs and entertainment an urban area provides," he said. "Supply and demand imbalances and unhealthy levels of price growth in several metro areas have made buying an affordable home an onerous task for far too many first-time buyers and middle-class families."
Yun says it is time for homebuilders to double their focus on constructing single-family homes. With millennials increasingly buying in the suburbs, tight inventory and affordability concerns will likely worsen without significant headways made in housing starts in relation to job creation.
The survey also found that confidence about now being a good time to buy is waning among renters, particularly in the West, where prices have solidly risen. Heading into the spring buying season, the survey found that compared to the December 2015 survey, the same share of homeowners (82 percent) but fewer renters (62 percent versus 68 percent last quarter) believe that now is a good time to buy.
"Accelerating home prices and the perceived difficulty in obtaining a mortgage appears to be tugging at the confidence of renters," explained Yun.
In Silicon Valley, the real estate market has always been well above the nation's average due to many favorable market factors, said Karen Trolan, president of the Silicon Valley Association of REALTORS®. "The price trend is continuing to rise. We are finding a steady rise in the annual number of new jobs at least to 4 percent. Consumer confidence and spending are slowly rising, too," said Trolan.
Among current homeowners, fewer (56 percent) believe it is a good time to sell compared to the fourth quarter of 2015 (61 percent). Amid steep price increases and tight supply, respondents in the West were the most likely to think now is a good time to sell, while also being the least likely to think now is a good time to buy.
Less than half of households surveyed believe the economy is improving (48 percent), down from 50 percent in last quarter's survey. Currently, renters, younger and lower income households and those living in urban areas are more optimistic about their future financial situation.
Across all age groups, when asked about their future buying preferences, survey responses were closely tied to each generation's typical lifestyle, with younger buyers being more likely to consider buying a single-family home. Not surprisingly, renters and younger buyers would for the most part purchase larger homes, whereas older buyers would purchase similar or smaller sized homes.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
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