New findings from the National Association of Realtors show a growing share of households in the first three months of the year feel more confident about the economy and their financial situation, but don't feel now is a good time to buy a home. According to NAR's first quarter "Housing Opportunities and Market Experience" (HOME) survey, optimism that now is a good time to buy a home is at its lowest point in the past two years, at 68 percent compared with 72 percent last quarter. Among renters, feelings about buying further declined to 55 percent compared with 60 percent last quarter.
NAR chief economist Lawrence Yun says extremely challenging market conditions are chipping away at homebuyer optimism. "The critical shortage of listings in most markets continues to spark a hike in home prices that is not easy for many buyers - and especially first-time buyers - to overcome," he said. "Adding more fuel to the affordability fire is the fact that mortgage rates have shot up to a four-year high in just a few months."
As home prices continue rising in most markets, the share of homeowners who believe now is a good time to sell increased to 77 percent in the first quarter from 76 percent last quarter. A year ago, 69 percent of homeowners thought it was a good time to sell.
"There's no question that a majority of homeowners have amassed considerable equity gains since the downturn. Home prices have grown a cumulative 48 percent since 2011 and are up 5.9 percent through the first two months of this year," said Yun
More households in the first quarter of this year (60 percent) believe the economy is improving compared to the fourth quarter of 2017 (52 percent). The HOME survey's monthly Personal Financial Outlook Index showing respondents' confidence that their financial situation will be better in six months, rose from 59.1 in December to 62.0 in March. Yun said attributes the jump in optimism to the robust job creation in most of the country and larger paychecks households are enjoying because of faster wage growth and the recent tax cuts.
Ironically, several metro areas with the healthiest labor markets also have the most severe supply and affordability pressures. Non-homeowners responding to the quarterly survey cited top barriers preventing them from saving for a down payment are limited income (47 percent), student loan debt (30 percent), rising rents (28 percent), and health and medical costs (14 percent).
Non-homeowners were also asked reasons why qualifying for a mortgage would be difficult. Income uncertainty (45 percent), a low credit score (34 percent) and too much debt (26 percent) were mentioned the most. Twenty-nine percent said they lacked the financial knowledge or did not know the first step needed to qualify.
"Owning a home continues to be a good, long-term investment, but it should not be looked at only as an investment," said Bill Moody, president of the Silicon Valley Association of Realtors. "A home provides greater security for families, it satisfies their need for shelter, and provides stability for families by providing a place where their children go to school, where neighbors become lifelong friends. It's something you can call your own."
Moody added, "If in it for the long-term, potential buyers should first discuss their financial situation with their Realtor and lender to learn about steps they can take to improve their chances for obtaining a mortgage. Counties, cities, and agencies like Housing Trust Silicon Valley, have programs that can help with down payment assistance and grants."
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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