Some call it the “blue wave,” others wonder if it was closer to a splash than a tsunami. However you see it, the midterm elections on November 6th captured Americans from both sides of the political spectrum for much of the fall. As new congressmen and congress women get ready for swearing in in less than a month, how did the election results affect our housing market?
Millennial homeowners among most eager to sell before prices fall, signaling more starter homes could enter market, according to ValueInsured’s Modern Homebuyer Survey
Seventy-five percent of Americans believe their local housing market is “cooling off” – among them, 72 percent say they are not surprised – according to results from ValueInsured’s Q4 2018 Modern Homebuyer Survey, released today.
This shift in market perceptions follows five consecutive quarters where majority of Americans believed housing was overheated. Among states with the most robust home sales activity, 22 percent of residents in California, 19 percent in Colorado, 36 percent in Texas, and 22 percent in Washington say their local market is not cooling.
The ValueInsured Housing Confidence Index registered at 63.0 on a hundred-point scale for all Americans in Q4, down 4.7 points in one year. Homeowners, historically the most confident segment on the Index, produced a score of 71.6 in Q4, the second-lowest level recorded in thirty months.
You may have noticed many more reports about rising debt, delinquencies, inflation and risk of an associated recession. Curious ourselves, we thought we'd put things into context (you have to be concerned with fake news, right)? And it was interesting.
If you just follow housing, you may have positive or negative feelings about the market trends, but to get the full picture, you cannot isolate just that one expenditure. You have to look at similar debts like student loans, car loans and credit cards (and rising delinquencies). Put together, we are now at similar debt levels as 10- years ago. So, when a buyer is thinking about buying a home, they are also thinking about all of these other debts and expenses.
And then there is inflation. It has been whispered about for a while, but it may become a roar in the near future. This is a great article on why you should keep an eye on it (just ignore the sales pitch at the end).
Home buying has become intensely competitive in some of the nation’s top markets. Over 1 in 3 homebuyers made an offer on a home last year sight unseen, while home sellers are expecting shorter closing windows and more lenient closing terms. None of these is news. Now, we have another new data point.
According to ValueInsured’s latest Q2 2018 Modern Homebuyer Survey, 21% of all surveyed homebuyers have experienced a failed sale transaction due to what they consider to be “unrealistic seller’s demands,” including waiving contingencies, cash-only offers, and fast closing. 26% of millennial first-time homebuyers and 30% existing starter-home buyers surveyed report to have experienced these sellers’ demands that they believe to have derailed a potential sale.
In the past two weeks, several housing headlines caught the eyes of many. MarketWatch printed “Thinking of selling your home? Do it before 2020, economists say”. Citing housing experts, Zillow released a Home Price Expectation Survey where it is predicted that the Next recession will begin in 2020. CoreLogic reported “More than half of US housing markets were overvalued in April”. Chief economist of NAR warned the current run-up in home prices is not sustainable, which is then echoed by a separate study and yet another bearish headline of unsustainable home price gains by Black Knight.
Not trying to be a downer here, but these chorus of consistent headlines are the elephant in the room and hard to ignore. So let’s address it.
Anyone who has come across a “Home Buying for Dummies” or “Investment 101” type book or website should be able to recite this golden rule: don’t try to time the market. While applicable to most investors, this is likely truer for homebuyers, who need a place to live and probably shouldn’t wait. Increasingly, however, they appear to be deviating from the advice.
Perhaps the real surprise – homebuyers are not alone. Homeowners are also growing concerned with timing the market, according to ValueInsured’s latest Modern Homebuyer Survey…
According to ValueInsured’s Q1 2018 Modern Homebuyer Survey, 62% of interested first-time homebuyers – including 65% of Millennials – who plan to buy “in the near future” are concerned they cannot afford a down payment on a home they would like to live in.
But if you think the affordability challenge is exclusive to non-homeowners who wish to enter the elusive homeownership rank, think again. According to ValueInsured’s latest survey on American homebuyers’ confidence and sentiments, even existing homeowners are not immune.
