The Western U.S. Is Bullish on Selling Homes but Not So Much on Buying
December 16, 2016 by Pacific Union:
Homeowners and renters in Western states believe now is a good time to sell a home, although rising prices and tight housing supplies make them a bit more wary of buying than those in other regions.
Those are two of the findings in a fourth-quarter survey just released by the National Association of Realtors. The new Housing Opportunities and Market Experience survey asked respondents about their confidence in the U.S. economy and their housing expectations in 2017.
At 69 percent, respondents in the West lead the nation in believing that now is a good time to sell. That’s a good sign that more properties may come on the market in the coming year and help ease the shortage of available homes in the region. Nationwide, 62 percent of survey respondents said sellers would do well in the current market — an opinion shared by 62 percent of those in the Midwest and South and 56 percent in the Northeast.
Conversely, the West, at 59 percent, trailed the rest of the country in saying that now is a good time to buy. Across the U.S., 70 percent of respondents said buyers have an advantage in the current market, led by those in the Midwest (77 percent) and followed by the South (73 percent) and the Northeast (68 percent).
The survey also found a widening gap in confidence between homeowners and renters. Fifty-seven percent of renters said now is a good time to buy, down from 60 percent in the third quarter and 68 percent a year ago, compared with 78 percent of homeowners — unchanged from the third quarter and down from 82 percent a year ago.
Existing-home sales are expected to reach 5.42 million by the close of 2016, an average 3.3 percent higher than in 2015 and the best year since 2006 (6.47 million).
In 2017, sales are forecast to grow 2 percent to 5.52 million. The national median existing-home price is expected to rise to 5 percent this year and 4 percent in 2017. By the end of next year, mortgage rates are projected to reach 4.6 percent, and the Federal Reserve is expected to raise the Fed funds rate several times to 1.25 percent.
“Although the economy is expected to continue to expand, with around 2 million net new job creations, existing home sales are expected to see little expansion next year because of affordability tensions from rising mortgage rates and prices continuing to outpace income growth,” NAR Chief Economist Lawrence Yun said in a statement accompanying the survey results.
The fourth-quarter survey found that a year of robust job growth and lower unemployment is translating into stronger confidence about the economy. The share of households who believe that the economy is improving increased to 54 percent — compared with 48 percent in the third quarter — and is currently at its highest share since the survey’s debut a year ago. Those most optimistic about the economy are under the age of 44, living in urban areas, and with higher incomes.
The survey’s monthly Personal Financial Outlook Index — showing respondents’ confidence that their financial situations will be better in six months — rose slightly, to 59.8 in December on a 100-point scale. The index stood at 58.6 in September, in line with the sentiment a year ago, at 59.6. The index reached a high of 61.1 in May of this year.