Fewer us renters planning to buy

Photo: Ell Brown

Fewer renters are planning to buy a home in the US, as confidence in the market begins to fade.

A new survey from Zillow shows that homeowners feel great about the current state of the housing market, but for the first time are less optimistic about its future.

The survey asked 10,000 renters and homeowners about the condition of their local real estate market, their expectations for home value growth and affordability in the future, and their aspirations for homeownership.

Past surveys found homeowners feeling exuberant about the future, with 5.2 million renters saying they planned to buy this year. Now, though, the percent of renters planning to buy has fallen from 12.1 per cent to 11.4 per cent in the first half of the year. The perception is that it is not such a good time to buy, with the portion of those believing recent homebuyers would be better off in 10 years' time falling.

"The housing market is slowing down, and Americans' confidence in the future of the market is understandably fading a bit, too," says Zillow Chief Economist Dr. Svenja Gudell.

Home value growth has slowed in almost all housing markets this year, giving homebuyers some breathing room. In those markets with marked slowdowns, many more buyers are looking to buy their first home. For example, eight per cent of Philadelphia renters said they planned to buy within a year in the January survey, when home values were rising at a 3.1 per cent annual rate.

The opposite occurred, though, in markets where home value growth is still well above national norms. Here, renters are less optimistic about their buying prospects. In San Francisco, 18 percent of 18- to 34-year-old renters planned to buy a home within a year when asked in January. At that point, San Francisco home values were rising at a 7.9 per cent annual rate. In July, home values were up an even higher 11 per cent year-over-year, and only five per cent of millennial renters surveyed then said they planned to buy within a year.

"Despite remaining quite confident overall, homeowners are less confident about the future than they are about the present. Seeing still stronger than normal home value appreciation in markets like San Francisco and Seattle might remind them of the last housing bubble. But the good news is things are leveling off with no crash in sight. If incomes rise to keep up with home values – and that's a big if – people can count on homeownership in their future, even in hot markets."