Consumer sentiment toward the U.S. economy and real estate market increased across all age groups, surging to the highest levels seen since the survey’s inception.
- U.S. economic satisfaction and real estate market favorability rose across all generations when compared to December 2016 (our last wave of the survey).
- Millennial views on the economy jumped 13 percentage points (62% to 75%), the largest increase among all age groups.
- Satisfaction with the U.S. economy and real estate market was the highest seen since the survey began in 2015.
- Current homeowners said that lower interest rates were the top reason (49%) they felt favorable to the real estate market.
- The increasing value of real estate (43%) was the No. 2 reason.
- Prospective homebuyers who had a favorable view of the real estate market said that increased construction in urban centers was a key reason for their favorability.
- Part of this favorability is because urban construction leads to housing options that close to jobs.
- Market optimism found in the survey is in line with recent economic indicators, such as increases in employment and wage growth. (Source: Reuters)
While respondents, mainly Millennials, showed overall confidence in the market and a desire to wait and find their dream home, they also expressed concerns about rising interest rates.
- A majority (68%) of prospective Millennial homebuyers said they feel a sense of urgency to buy a home because interest rates are rising.
- One in five prospective Millennial homebuyers also said they have a desire to buy a home before rates increase.
- Despite higher favorability toward the real estate market, a slight majority of Millennials still reported feeling discouraged from buying a home due to rising interest rates.
- Even though rates may rise, a majority (72%) of prospective Millennial homebuyers still said that they are willing to wait to buy their dream home.
- Key Takeaways:
- Although the idea of a rate hike can grab headlines and create some unease, it’s important to remember rate increases are often the mark of the Fed’s belief in the strength of our improving economy.
- While rates may not feel low to a generation of first-time buyers who haven’t seen many meaningful rate hikes in their adult lives, the cost of borrowing money to buy a home remains near historical lows.
- Millennials recognize the benefits of entering the market before interest rates rise further, but still want to wait to find their dream home, creating a strong case to
- promote finding the right agent who will help navigate the current environment to achieve homeownership goals.
When considering a top neighborhood feature, friendly neighbors was the surprising top choice, ahead of even financial considerations.
- In a surprising twist, prospective homebuyers ranked friendly neighbors (50%) ahead of financial concerns such as the accurate market value of a home (39%) or confidence that the home will be a good investment in the future (37%).
- Other highly ranked neighborhood characteristics ranked highly in Wave 7 included walkability (45%), and a good school district (41%).
- For Millennials, proximity to jobs, family, and the feeling of a strong sense of community were also important factors when looking at a neighborhood.
- Key Takeaway:
- Think beyond size and budget when searching for your dream home, a local agent who is invested in the community can help buyers find a home that meets their financial and emotional needs.