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Homebuyer sentiment dims with rising prices

Although the economy has added on average 180,000 jobs per month and home sales have been strong so far this year, homebuyers and renters grew more pessimistic about their prospects for buying homes over the summer, the National Association of Realtors' (NAR's) most recent survey of consumers reveals. NAR’s Jessica Lautz, managing director of survey research and communications, spoke with Scotsman Guide News about why homebuyers are starting to take a dimmer view about the market.

Could you talk a little bit about your survey, what you are trying to assess and who you survey each month?

Jessica LautzIt is about 900 to 1,000 respondents every month, and we are surveying both homeowners, and people who either rent  or perhaps live with somebody else. So we are really collecting from everyone from the U.S. population. We are collecting the data on a monthly basis, but are reporting it on a quarterly basis, so that we have a larger sample.

Over the last year or so, what sort of attitudes are you seeing in terms of buying and selling houses?

People are increasingly saying it is a good time to sell. In the first quarter, just 56 percent of people thought that now was a good time to sell, but that has increased all the way to 63 percent in this latest release for the third quarter. On the flip side of that, unfortunately, while more than 70 percent think it is a good time to buy, that has actually been decreasing. We suspect that has a lot to do with affordability. People are reporting on a quarterly basis that they are seeing prices in their communities increasing, and they are expecting them to increase, as well.

Do any regional differences show up in your survey?

We have really been looking at the West region. It has a notorious affordability crunch, especially in California. So we have seen, particularly in the West, that people expect their prices to go up, that they think that now is a good time to sell, but they don’t think it is necessarily a good time to buy. At 65 percent, it is lowest share who think that it is a good time to buy. In the Midwest or the South, 73 percent think it is a good time to buy right now. There is a bit of a difference there.

People seem to overestimate what they have to put down on a home to get a mortgage. Is that right?

That was one of our quarterly questions, a new question for this month. We asked three questions on downpayments: Whether they received help; whether they have helped someone with a downpayment; and then, what they would expect they would need to put down for a downpayment? Surprisingly, people think you need to put 20 percent down, or even more than that, to purchase a home today. So, there seems to be a lack of awareness of low-downpayment mortgage options.  

What about the availability of mortgage credit generally.

We do ask if they think they have the ability to qualify for a mortgage. We did see that 29 percent think that it would be very difficult to qualify for a mortgage, which I suppose is not surprising when they would think that they would need to put such a large share down to purchase a home. And 36 percent think it would be somewhat difficult to qualify for a mortgage in this past quarter. [Consumer sentiment has] remained very flat for the “very difficult” [category], but the “somewhat difficult” [category] did jump to 36 percent from 30 percent last quarter. 

My sense is that housing market is doing well, and the economy is improving. Are people generally still feeling good about things?

We do ask a question about personal financial outlook. Those who are younger generations, those who are renters, they believe that their financial situation will improve. I think it is really interesting that they are looking upwards. They do think there is more opportunity for them, and things can get better.



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