How are consumers feeling about the housing market?

June 19, 2018

Many real estate professionals might not find it easy to get the average person's perspective on what today's housing market is like, but understanding that point of view could go a long way toward ensuring they can help clients navigate the buying or selling process.

More than two-thirds of would-be buyers still think now is a good time to make a purchase, and close to 2 in 5 strongly agree that this is the case, according to the latest data from the National Association of Realtors. However, it seems that number may be sliding as summer gets truly underway, in part due to the difficult conditions many shoppers now face when trying to make a purchase. This issue may be particularly true for first-time buyers, as those currently renting are less likely to see the market as being advantageous for them.

A growing dichotomy
Nonetheless, it's expected that sales will remain strong throughout the summer, as prices continue to rise at rates often double historical averages, and rates keep ticking up with the improving economy. NAR Chief Economist Lawrence Yun noted that conditions in today's market can both be discouraging to shoppers because of how much competition most homes are likely to attract, but also spurred on by the prospect of higher costs if they fail to make a purchase in the near future.

Meanwhile, that limited inventory comes despite the fact that 74 percent of all survey respondents say now is a good time to sell, and 42 percent strongly believe so.

A rosier future?
However, it's worth noting that consumers' feelings around all aspects of home purchasing is getting particularly strong, according to the latest Fannie Mae Home Purchase Sentiment Index. In May, that index hit the highest point ever observed, rising beyond April's previous all-time record high. For instance, more sellers now think it's a good time to put their homes on the market - 46 percent, up from 32 percent in May 2017 - and expectations for higher home prices and mortgage rates are starting to even out or even decline.

Likewise, more respondents said they were starting to enjoy higher incomes versus where they were a year ago, and a growing number feel better about their ability to hold their jobs going forward, which may bolster confidence in their ability to buy going forward. However, here too there is a little more reticence about the market from current renters, and other Fannie data shows lenders think interest among shoppers could flatten in the coming months.

When agents have a good idea of where would-be buyers stand with respect to the current market conditions and what that could mean for shoppers' flexibility to buy, they are far more likely to help ferry clients through the real estate sales process as quickly and easily as possible. That, in turn, can help them continue to grow their base of satisfied former clients who can provide positive word of mouth on an ongoing basis.