On Wednesday, new consumer survey data from the National Association of Realtors (NAR) was released—reporting that non-homeowners' main motivators for deciding to buy a home are lifestyle changes, improvements in their financial situation, and having that part of the American Dream. However, the constant state of the market isn’t aligning with potential buyers’ desires.
NAR’s survey titled, “Aspiring Home Buyers Profile” analyzed 2017 quarterly consumer insights from its Housing Opportunities and Market Experience (HOME) survey of non-homeowners for both renters and those living with a family member.
As a result of the survey, over half—at 56 percent—of non-owners indicated they could not afford to buy a home each quarter, with the share feeling this way reaching its highest in the last three months of the year.
According to Lawrence Yun, Chief Economist for NAR, severe inventory shortages are making homebuying less affordable and are dimming optimism among many renters who desire to be homeowners.
"A tug-of-war continues to take place in many markets throughout the country, where consistently solid job creation is fueling demand, but the lack of supply is creating affordability constraints that are ultimately pulling aspiring buyers further away from owning," he said. "These extremely frustrating conditions continue to be most apparent at the lower end of the market, which is why the overall share of first-time buyers remains well below where it should be given the strength of the job market and economy."
In addition, the rapid price growth is also impacting non-owner’s feelings towards homeownership. After reaching a high of 62 percent in Q3 2017, the percentage of respondents who believe now is a good time to buy decreased to 58 percent by the end of 2017.
As for 2018, Yun anticipates that housing demand may increase by the millennial generation getting older and looking into different lifestyles. In fact, the survey discovered that the main reasons non-owners would buy a home in the future include getting married, starting a family or retiring, followed by an improvement in their financial situation, and the desire to settle down in one location.
"Housing demand in 2018 will be fueled by more millennials finally deciding to marry and have kids and the expectations that solid job growth and the strengthening economy will push incomes higher," said Yun. "However, with prices and mortgage rates also expected to increase, affordability pressures will persist.”
Yup continued, “That is why it is critical for much of the country to start seeing a significant hike in new and existing housing supply. Otherwise, many would-be first-time buyers will be forced to continue renting and not reach their dream of being a homeowner."