Survey Finds Low Confidence in ‘Unhealthy’ Housing Market

According to ValueInsured’s most recent Modern Homebuyer Survey, Americans’ desire to own a home is high (79%, among non-homeowners), but 67% of respondents believe the housing market is unhealthy.

In addition, the number of people who believe buying a home today is a secure and smart investment dropped to 52%.

Despite reports of a strong sellers’ market, the decline in confidence is significant across the board among homeowners and non-homeowners alike. The latest ValueInsured Housing Confidence Index registered at 62.0, a 4.9-point drop from Q1 2018. Both homeowners and non-homeowners reported sizeable drops in confidence, to 69.3 (-5.0) and 54.7 (-5.7), respectively. Millennial homeowners reported the largest decline among key segments, with a 6.7-point drop.

“Housing confidence – as do home prices – goes up and down, but what’s noteworthy now is the decline among homeowners; in particular, Millennials,” says Joe Melendez, CEO and founder of ValueInsured. “Many are stuck in homes they have outgrown and cannot upgrade, which explains the inventory shortage we see at the starter-home level.”

According to the survey, three key factors are affecting home buyers’ attitudes on housing:

  • Confidence in the ability to afford a home  has plummeted double digits for all groups since a post-Brexit high, with homeowners who want to sell and then buy reporting an 11-point drop. Affordability confidence for non-homeowners who want to buy fell 13 points during that same period to just 32 percent.
  • Concern about rising interest rates, with 59% believing a 30-year fixed mortgage rate will reach 5% by 2019; 13% expect to see it at 6% by end of 2019; and
  • Growing doubt that rising prices are sustainable, with only 42% of Millennial first-time home buyers – the largest segment of buyers – believing a home they buy now will be worth more by the end of 2019. Sixty-eight percent of all Americans surveyed believe a correction will happen within 24 months.

Despite high home prices, even potential sellers’ optimism is waning, with 61% of homeowners saying the housing market is heading in a good direction “for people like me.” This is down from a post-Brexit high of 78%. The survey also found that 63% of homeowners (including 59% of Millennial homeowners) and only 37% of non-homeowners consider now to be a good time to buy a home. These are all the lowest levels recorded in the quarterly survey’s history (previous nine quarters).

For people who are able to find a home in the current bidding-war, sight-unseen climate, buyer’s remorse is lurking. In fact, 62% of Americans surveyed say people who buy a home now will have buyer’s remorse. Among them, 24% believe 2018 home buyers could feel the same level of remorse as those who bought in the last peak before the 2008 housing crisis.

More details about the ValueInsured Modern Homebuyer Survey are available here.

1 COMMENT

  1. If you examine the underlying data you will see this survey claims to use 1000 responses to demonstrate a legitimate cross section of views. Leaving the questionable methodology and statistics aside, the surveys authors self-profess that “millennials” supplied the largest cross section (if not all) of the responses.

    A quick trip to the company webpage http://www.valueinsured.com/trendsource/2018/5/16/housing-confidence-bottoms-out will reveal the following statements, proffered large part by millennials:

    1.Confidence in the ability to afford a home has plummeted double-digits for all groups since a post-Brexit high, with homeowners who want to sell and then buy reporting an 11-point drop. Affordability confidence for non-homeowners who want to buy fell 13 points during that same period to just 32 percent;
    2.Concern about rising interest rates; 59 percent believe a 30-year fixed mortgage rate will reach 5 percent by 2019; 13 percent expect to see it at 6 percent by end of 2019; and
    3.Growing doubt that rising prices are sustainable with only 42 percent of millennial first-time homebuyers – the largest segment of buyers – believing a home they buy now will be worth more by the end of 2019. 68 percent of all Americans surveyed believe a correction will happen within 24 months.

    In my view, the problem is not with the housing industry which has roared back to life this past year, or with the present growth trends that feed a healthy economy. The issue is with the millennials themselves who generally represent a stalled workforce due to a lack of practical skills and whom are generally under-educated regarding housing markets and the economic principles that drive a successful housing marketplace. In essence, and in my view this survey exposes the echo chamber that millennials generally succumb to. It therefore presents a good representation of their personal views, but completely miss-represents the condition of our actual housing marketplace. The reality is that House Price Index Datasets and key indicators such as Construction Spending, Residential Construction, Monthly Home Sales, Pending Sales and the NAHB’s Housing Market Index all point to a resurgence of our housing markets.

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