Although more than half of Americans believe now is a good time to buy a home, many are cautious about entering the market, according to the National Association of Realtors.
According to the group’s Q3 HOME survey, 63% of Americans believe now is a good time to buy a home. Of these respondents, 34% say they strongly believe this to be a fact.
This reading, although promising, is still a decrease from last year’s percentage. During Q3 of 2018, a whopping 75% of respondents indicated the housing market’s purchasing conditions were favorable, even though mortgage rates then were higher than they are now.
Lawrence Yun, NAR’s chief economist said while optimism fared well this quarter, the outlook also contains a degree of caution.
“Mortgage rates are at historically low levels, so I see no sign of the optimism about home buying fading,” Yun said. “However, the fact that slightly fewer are expressing strong intensity compared to recent prior quarters is implying some would-be buyers have concerns about the direction of the economy.”
Earlier this year, a panel of more than 100 housing experts and economists announced they expected the nation’s next recession to hit as early as 2020.
Real estate brokerage company Redfin says the housing market, which remains strong, is unlikely to be a culprit or victim of the next recession. However, the company warns that doesn’t mean the industry will go unscathed.
“Whether it happens this year, next year, or in 10 years, another recession is inevitable,” Redfin writes in a report. “Regardless of when it comes, it’s unlikely to have a large negative impact on the real estate market.”
That being said, Redfin claims that some housing markets are more at risk of a housing downturn than others.
According to the company, Riverside, California; Phoenix and Miami have the highest risk of a housing downturn in the next recession. Homeowners and sellers in these markets, like many around the country, risk the loss of financial security.
“If the U.S. enters a recession in the next two years, it will likely be caused by the global trade war,” said Daryl Fairweather, Redfin chief economist. “U.S. industries that rely on exports, like the automotive industry and the agricultural industry, would be the most vulnerable and susceptible to layoffs.”
“Homeowners who are laid off may not be able to continue covering their monthly mortgage payment and may be forced to sell their homes, Fairweather said. “And would-be homebuyers won’t feel so confident about making a big purchase when they don’t feel confident about their job security or their financial wellbeing.”
NAR’s data supports this claim as the HOME survey indicates that market optimism slides based on homeowners’ income levels.
According to NAR, when respondents with incomes under $50,000 were asked if now a good time was to buy, 54% answered yes. Throughout the survey, answers in the affirmative grew as household incomes increased.
In fact, in the $50,000 to $100,000 bracket, NAR says 64% of respondents said now was a good time to buy, and among those polled with an income of $100,000, 72% agreed.
“Not surprisingly, as incomes increase, the process of buying a home is less of a strain,” Yun said. “This has always been the case, but in this third-quarter survey, we see it to an even greater extent – high earners are more open to buying a home.”
NOTE: The National Association of Realtors HOME Survey was administered through TechnoMetrica. The survey was conducted from January 2019 through March 2019 and represents a total of 2,710 household responses.