Americans increasingly believe the housing market is overheating and home prices continue to rise, and said they suspect a housing price correction may be imminent, according to the latest Modern Homebuyer Survey from ValueInsured, a provider of down payment protection for homebuyers.
However, housing confidence continues on a positive trajectory due to high home prices and low inventory. The company’s Housing Confidence Index score increased one percentage point from the first quarter to 68.7 in the second quarter on a hundred-point scale.
And nearly eight in 10 Americans, or 79%, saying homeownership is an important part of the American Dream.
But despite this commitment to homeownership, they are less confident in buying a home now and don’t believe it will hold its current value. The survey showed 57% of Americans said home prices are overvalued and unsustainable in the second quarter this year. This is an increase of seven percentage points from the first quarter.
The fear was even higher in urban areas, where 65% of Americans said homes are overvalued and unsustainable.
Prospective homebuyers were also more wary as 63% of all homebuyers and 72% of all Millennial homebuyers said they are concerned with the timing of the market and want to make sure they are not buying high.
“We see more homebuyers concerned with timing the market,” ValueInsured CEO Joe Melendez said. “This is especially true for Millennials, who are more likely to switch jobs, relocate or need to upsize in the next few years. No one wants to buy at the peak and find themselves underwater as so many did a decade ago.”
While experts explained living in a home more than seven years could lower the homebuyer’s exposure to market fluctuations, only 37% of Millennials plan to live in their next home more than six years.
“Beyond the jitters, I see in our survey an increasingly informed nation of homebuyers, who understand the risk of the market,” Melendez said. “To those concerned about a price correction, or waiting to time the market, I recommend a proactive approach. Have an exit plan, then anytime you find a home you love is a good time to buy.”