Consumer Sentiment on the Rise as U.S. Real Estate Heads into Spring Home-Buying Season
Despite concerns of federal interest rate hikes, current and prospective homeowners show a more favorable view of the real estate market in Berkshire Hathaway HomeServices’ latest
Homeowner Sentiment Survey
IRVINE, CA (April 20, 2016)– Berkshire Hathaway HomeServices, part of the HSF Affiliates LLC family of real estate brokerage franchise networks, today released results of its latest Homeowner Sentiment Survey indicating that current and prospective homeowners are increasingly optimistic about U.S. real estate. Respondents cited low interest rates, an improving economy and increasing housing inventory as key reasons for their growing optimism.
Reversing downward trends for the past two surveys, 61% of current homeowners and 65% of prospective homeowners now see the real estate market as more favorable for sellers and buyers. In fact, 76% of prospective homeowners – a survey group composed mainly of millennials and Gen-Xers – said this year is a more ideal time to buy a home. That represents an 11-point jump from the December survey.
“Our data underscores what we’re beginning to see across America – that millennials are increasingly interested in homeownership and its virtues,” said Gino Blefari, CEO of HSF Affiliates. “They understand that mortgage rates are still low, the economy and jobs pictures look good and that housing remains a fundamental, long-term investment. Opportunity is opportunity, no matter your demographic.”
Respondents seem to have shaken off the effects of the Federal Reserve’s December rate hike. In the December Homeowner Sentiment Survey, 68% of prospective homeowners polled said that increased rates would have “some impact or a strong impact on my life.” Yet mortgage rates trended lower and remain near historic lows. Though the Federal Reserve has pledged additional increases in its benchmark interest rate, respondents cited lower rates as the primary reason for their optimism toward real estate. In fact, an increasing number of current homeowners – whose ranks are mostly Boomers and Gen-Xers – see modest mortgage rate hikes as a sign that the real estate market is heading in the right direction.
“Though no one can predict the future, we believe there’s a high probability that mortgage rates will remain low for the foreseeable future,” said Berkshire Hathaway HomeServices President Stephen Phillips. “The Federal Reserve will act responsibly with future rate increases yet, to a degree, its hands are tied by the shaky state of the global economy. Aggressive tightening would not only choke progress in the U.S. economy, but would also impact foreign economies that continue to seek stability.”
Prospective homeowners are significantly less concerned than in December (by 17 percentage points) that low housing inventory, which has hampered real estate’s recovery in many markets, will hurt their chances to find the right home. They are less concerned (by 10 percentage points from the previous survey) that new lending requirements will make it more difficult to qualify for home loans.
However, 72% of prospects showed increasing concern that rising home prices will make it more difficult to buy a home. That’s 6-point jump from the December survey. To purchase their ideal home, current homeowners and prospects said they are more willing to forego swimming pools, accessibility to public transportation, basements and proximity to their workplace. They are less likely to compromise on location within a good community, a good floor plan, proximity to solid schools and the outward appearance of a home.
“We expect a busy spring home-buying season with momentum extending through the year,” said Blefari. “As millennials increasingly embrace homeownership, it will add to a domino effect among move-up buyers that should ease tight inventory in many markets and bring more balance to real estate overall.”
The full survey details are available upon request.
Berkshire Hathaway HomeServices Consumer Sentiment Survey Methodology
Interviews with 2,506 respondents were conducted online by Edelman Intelligence in February 2016. The respondents captured were either current homeowners (individuals who currently own a home as a primary residence) or prospective homeowners (individuals who do not currently own a home and are likely to buy a home as their primary residence in the next six months). The margin of error is +/-2.2% for current homeowners and +/- 4.4% for prospective homeowners.
About Berkshire Hathaway HomeServices and HSF Affiliates LLC
Berkshire Hathaway HomeServices, based in Irvine, CA, is a real estate brokerage network built for a new era in residential real estate. The network, among the few organizations entrusted to use the world-renowned Berkshire Hathaway name, brings to the real estate market a definitive mark of trust, integrity, stability and longevity. Visit www.berkshirehathawayhs.com.
Irvine, CA-based HSF Affiliates LLC operates Berkshire Hathaway HomeServices, Prudential Real Estate and Real Living Real Estate franchise networks. The company is a joint venture of which HomeServices of America, Inc., the nation’s second-largest, full-service residential brokerage firm, is a majority owner. HomeServices of America is an affiliate of world-renowned Berkshire Hathaway Inc.