A record number of Americans are feeling confident about the real estate market, according to the latest Fannie Mae Home Purchase Sentiment Index® (HPSI). In February 2017, the HPSI increased to a new, all-time high at 88.3%! The growth in consumer optimism in housing stems from greater confidence in job security, along with rising wages.
The HPSI survey found that job confidence increased by 9 percentage points to 78%. The share of respondents reporting significantly higher household income is up by 4 percentage points, reaching 19%. Both of these levels represent all-time category highs in the HPSI survey, which has been conducted monthly since 2011.
The rising confidence in real estate is tilted towards buyers, even though home inventories have been lean in much of the country. The share of respondents who think now is a good time to buy a home increased 11 percentage points, while the share who believe that now is a good time to sell a home increased 7 percentage points.
The most upbeat respondents in the survey are Millennials, which indicates that more first-time home buyers can be expected to enter the market. This matches recent findings by Ellie Mae, whose own survey shows that Millennial home buyers accounted for 84% of all closed mortgage loans in January 2017. Most of those were FHA mortgages, another indicator that the market share of first-time home buyers could be growing!
The only area of concern we find in the HPSI survey is the consumer expectation that mortgage interest rates will stay the same or decline. About 55% of respondents hold this opinion, despite recent upticks in rates, and warnings of future rate increases by the Federal Reserve. Of course, Americans have been hearing “rates are going to rise” for years, while the needle has barely moved. Still, low interest rates shouldn’t be taken for granted! Even modest increases in interest rates can reduce your home buying power, and when rising rates are combined with increasing home prices, the one-two punch can push some first-time buyers out of the market.
Stay Informed with StartingPoint Realty – dedicated to first-time Chicago home buyers!
StartingPoint Realty proudly serves first-time home buyers throughout Chicago and the Northwest suburbs. We provide complete education and guidance during the entire home buying process! Attend a free home buying seminar to begin your path to home ownership!
We also provide many other resources to help you become a successful home buyer! Need down payment assistance? Check out our list of home buyer assistance programs on our website! You can also visit our Chicago Resource Center for in-person, no-pressure information and assistance.
Always feel welcome to contact us for help with your Chicago home buying questions!
Ryan Gable Broker/CEO Starting Point Realty
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