Seller optimism hits high point in HOME report
A record high share of respondents to the latest Housing Opportunities and Market Experience survey said they consider it a good time to sell. At the same time, a dwindling share of buyers considered it a good time to buy a home.
The HOME survey is issued each quarter by the National Association of Realtors. A total of 2,731 people were interviewed via telephone for the latest report, covering the third quarter of 2018.
Seventy-seven percent of respondents said they consider it a good time to sell a home. This marked the highest share of seller optimism since the HOME survey began in 2015, up from 73 percent in the previous quarter and 63 percent in the third quarter of 2016.
Respondents were most likely to believe it was a good time to sell if they earned more than $100,000 a year (86 percent) or lived in the West (85 percent). In addition, 83 percent of the 35-44 age group and of the 55-64 age group thought it was a good time to sell. Thirty-five percent of respondents who earned less than $50,000 a year considered it a bad time to sell, along with 31 percent of non-owners who lived with someone and 30 percent of renters.
"Though the vast majority of consumers believe home prices will continue to increase or hold steady, they understand the days of easy, fast gains could be coming to an end," said Lawrence Yun, chief economist at the National Association of Realtors. "Therefore, more are indicating that it is a good time to sell, which is a healthy shift in the market."
Sixty-three percent of respondents thought it was a good time to buy a home. This was down from 68 percent in the second quarter of 2018 and a year-over-year drop of 9 percentage points.
Those who were most optimistic about buying included homeowners (73 percent), the 55-64 age group (73 percent), and rural residents (71 percent). Younger respondents and non-owners were more pessimistic, with 55 percent of renters, 51 percent of non-owners living with someone, and 48 percent of those ages 34 and under thinking it wasn't a good time to buy.
Fifty-nine percent said they thought it would be difficult to qualify for a mortgage, up 5 percentage points from the second quarter of 2018 but down 2 percentage points from the previous year. Those who were most likely to think they would have trouble qualifying for a mortgage were low earners (74 percent), ages 65 or older (64 percent), or living in the West (64 percent).
"This is most likely a manifestation of the constantly rising prices," said Yun. "As prices rise so do down payments, making the mortgage qualifying process more challenging."
Prices and economy
Seven out of 10 respondents said they believed prices had gone up in their neighborhood in the past 12 months. This was up slightly from 68 percent in the second quarter of the year and a jump of 7 percentage points from the third quarter of 2017.
Price increases were most likely to be reported in the West (80 percent), by top earners (78 percent), and by the 55-64 age group (75 percent). Those who were most pessimistic about buying a home were also most likely to report home price decreases in their neighborhood, with 10 percent of the youngest responses and 9 percent of both renters and non-owners living with someone saying prices have dropped in the past 12 months.
Fifty-three percent said they think home prices will go up in their community in the next six months, down 2 percentage points from the previous quarter and unchanged from the previous year. Price expectations showed minimal variation among different groups, although those most likely to expect price increases in the near future were in the West (59 percent), top earners (58 percent), or renters (56 percent).
Sixty percent of respondents said they think the United States economy is improving, up 2 percentage points from the previous quarter and 7 percentage points from the previous year. Optimism was highest among top earners (67 percent), rural residents (67 percent), and non-owners living with someone (65 percent).
Renters were the most pessimistic about the economy, with 53 percent saying they did not think it was improving. Fifty-one percent of those earning less than $50,000 a year felt the same.
Each HOME survey includes questions unique to that quarter, and the third quarter survey asked people about their considerations when choosing a neighborhood. Respondents were also asked about the availability of homes for sale in their community.
One in four respondents said they considered proximity to friends and family an important factor when choosing a new neighborhood. Twenty-four percent said they would want a manageable commute to work, while 20 percent thought it was important that a home be near their schools of choice.
Forty-seven percent said the proximity of highly rated schools was very important to them, while 23 percent considered it to be somewhat important. Nineteen percent considered this factor to be not at all important, while 11 percent thought it was not very important.
The respondents most likely to consider highly rated schools to be very important included top earners (58 percent), the 35 to 44 age group (56 percent), and the 45 to 54 age group (49 percent). Those most likely to consider highly rated schools to be unimportant included urban respondents (33 percent) and those ages 65 and older (25 percent).
More than half of respondents—56 percent—said the number of homes for sale in their neighborhood has not changed appreciably in the past six months. Twenty-three percent said there are more homes for sale than usual, while 15 percent said there are fewer than usual.
An increase in listings was most commonly reported among respondents from the West and the suburbs. Twenty-four percent of each group said there were more homes for sale than usual in their community.
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