Each year, the National Association of Realtors releases the Housing Opportunities and Market Experience Survey (HOME). This cleverly coined, monthly survey gathers American consumers’ opinions about the housing market. At the end of the year, data from the 12-month period is compiled into a larger report -- the HOME survey.
Here, at my Austin real estate blog, you’ll often find hometown tidbits among the articles. This month, we'll compare the hot and happening Austin real estate environment to the current American mindset about their own markets. The results might surprise you.
Home Ownership: A Good Financial Decision?
In 2015, the HOME survey found that 88% of U.S. households believe owning a home is a good financial decision. And a whopping 87% of U.S. households believe homeownership is part of their American Dream.
They cited the most appealing aspects of home ownership as ...
- A place to raise a family - 36%
- Owning place of one’s own - 26%
- A nest egg for retirement - 14%
- Financial security now - 3%
- Being part of a community - 8%
- Settling down - 4%
Home Affordability and the Renters
Though people are holding onto American Dream ideals, the HOME survey found that -- across the country -- affordability was named the biggest roadblock to owning a home. Similarly, here in Austin, affordability has been a hot-button topic in real estate news. In November 2015, a report released by the Austin Board of REALTORS® (ABoR), revealed the median price for Austin-area single-family homes
Meanwhile rent prices here are also known to pinch the pocketbook. Austin’s median rent price
, in 2015, was $1,683, compared to the national average of $1,382. With figures like these, it’s probably no wonder 83% of the HOME report’s current renters want to own a home in the future. According to the survey, a whopping 94% of renters ages 34 and younger say they aspire to be homeowners in the future.
Interestingly, according to the Realtor.com 2016 Housing Forecast
-- those ages 25 to 34 -- are predicted to be among the top buyers in the Austin area
in 2016. So it looks like Austin’s younger set might be ahead of the pack in terms of buying power, but they’re still purchasing later in life than their parents did.
From a 2015 Austin Monitor article:
“I think if there’s any trend, it’s that Millennials are buying homes probably later in life, because of college debt, because they’re maybe starting families later and, of course, (because of) affordability,” Omar Hossain, with Frost Bank, said.
This leads us to the following points found in the HOME survey…
Why Renters Don’t Currently Own
What Would Cause Renter to Buy
- Can’t afford to buy (53%)
- Currently need flexibility (19%)
- Don’t want responsibility (11%)
- Lifestyle changes such as marriage and/or starting a family (33%)
- Improvement in financials (26%)
- Desire to settle down in one location (13%)
Feelings About the U.S. Economy and Willingness to Buy
Among the renter households surveyed, 45% believe the U.S. economy is currently in a recession, and 43% of renters believe the economy is not currently improving.
However, Mark Sprague, state director of information capital at Austin’s Independence Title Company, believes differently -- at least when it comes to Austin.
“The Federal Reserve’s recent decision to raise interest rates is a sign of a healthy economy, and we’re fortunate that Austin has one of the strongest economies and housing markets in the nation
,” he said.
Recession or not, people’s belief and desire for the American dream of home-ownership remains strong
. As it turns out, 78% of those who think our economy is in a recession still want to purchase a home in the future. Similarly, 76% of renters who believe the economy is not improving say they want to one day own a home.
The State of Home Prices
Fifty percent of respondents believe home prices in their communities have gone up during the past 12 months. In Austin, they would be right. According to ABoR’s November 2015 Austin Real Estate Report
, the median price for local single-family homes has increased 10% year-over-year
However, this might not be the case in other areas of the country, as 11% of HOME respondents believe home prices have dropped, and 39% believe they’ve stayed the same.
About 56% who believe the economy is improving
-- and is not in a recession -- also believe home prices have increased in their local community. But the 44% with a bleaker outlook -- who believe the economy is not improving
-- and is in a recession -- say home prices have increased during the past 12 months.
Will Home Prices Rise or Fall? You Decide
Number of people who believe home prices will …
- Increase (42%)
- Decrease (9%)
- Stay the same (49%)
While the majority is not always right, in this case, they would be correct -- at least when it comes to Austin real estate. According to the Realtor.com 2016 Housing Forecast, median single-family home prices are expected to increase, in Austin, by 5%.
Based on the HOME survey's data, it seems Austin is fairly in step with the rest of the country. Affordability seems to be a big factor, not just here, but everywhere these days. Yet, despite this and pocket concerns about our economy, the majority seem to have remained optimistic about home ownership. Millennials are poised to step into home ownership across the country, and with Austin's younger set somewhat ahead of the pack in buying power, it appears -- at the very least -- that Austin's market mirrors our country's morale -- optimistic, future thinking and strong, like the American Dream.
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