Americans remained as confident in the U.S. housing market as they have been, but this cautious optimism may be on shaky ground. That, at least, is the conclusion of ValueInsured’s quarterly Modern Homebuyer Survey, released Thursday.
The survey index ended Q1 at 67.7 out of 100, which was down less than 1 percentage point from Q4. According to the index, the so-called Trump bump “has plateaued after two interest rate increases in three months.”
While Americans were generally confident in the market, only about half‒‒48 percent‒‒said they believe the housing market will be more favorable with the new administration. That’s down from just above half‒‒52 percent‒‒who said so in January.
At the same time, while 63 percent of Americans said they are hopeful that 2017 will be a better year for housing than 2016, 69 percent said so in January.
Most guarded feelings stemmed from prospective first-time and upgrade homebuyers, who said they sense growing risk regarding rising home prices and interest rates. Tellingly, three-fifths of interested homebuyers said six months ago was a better time to buy a home and that six months from now will be worse. Sixty-five percent said they expect more interest rate increases this year, and 61 percent say “the era of affordable mortgages is coming to an end,” the report showed.
Similar doubts nag millennial first-time homebuyers, 54 percent of whom said they lack the confidence that if they were to buy a home this year, it would be worth more next year. That compares to 48 percent of all others who said the same and is an increase of 13 percent points in just three months.
Similarly, two-thirds of Millennial first-time buyers said last year would have been a better year to buy, and that number slipped 6 percent toward doubt.
“It’s natural for buyers to be anxious,” said Joe Melendez, CEO of ValueInsured. “As prices rise, buyers are seeking ways to protect themselves.”
Still, the basic tenets of homeownership were largely valuable to survey respondents. According to ValueInsured, nearly 80 percent of those surveyed said they believe buying a home is more financially beneficial than renting, that they would like to buy a home, and that owning home is an important part of their American Dream. Those percentages were largely consistent with January’s survey.