Real estate professionals’ confidence grew in the second quarter of 2017, according to First American Financial Corp., provider of title insurance, settlement services and risk solutions for real estate transactions.
The Real Estate Sentiment Index surveys independent title agents and other real estate professionals to give a gauge on the real estate mortgage market.
Confidence for transaction volume growth in the next 12 months increased 9.1% from the first quarter, but dropped 4.8% from last year.
“Overall, confidence among title agents and real estate professionals in transaction volume growth in the coming year swelled this quarter, surging 9.1 percent,” First American Chief Economist Mark Fleming said. “The increase was driven by the rise in expectations for both purchase transactions and refinance transactions amid persistent low mortgage rates.”
“Strong Millennial demand and continued positive economic conditions combined with widespread tight supply are causing a dilemma in the market, as homeowners balance the benefit of selling their home in today’s sellers’ market with the risk of becoming a buyer in the sellers’ market,” Fleming said.
Confidence for growth in purchase transaction over the next 12 months increased 2.7% quarter-over-quarter but fell 1.1% from the second quarter last year. Real estate professionals predicted growth for refinances will be more pronounced. Their predictions for refinance transaction growth over the next 12 months increased 18.5% from last quarter but dropped 9.1% from last year.
Real estate professionals expect home prices across all property types to drop 0.18 percentage points over the next 12 months compared to last quarter.
“Despite the rising rate environment and limited inventory, title agents and real estate professionals validated that Millennials represent the majority of first-time homebuyers today,” Fleming said. “Interestingly, according to title agents and real estate professionals surveyed, Millennials are making the choice to own primarily based on the desire to improve their financial situation and to accommodate having children.”
“Like generations before them, saving for the down payment is the biggest obstacle,” he said.