According to a brand-new survey by Zillow, millions of people who are currently renting would love to buy a home this year. This suggests there will be considerable demand from first-time buyers, providing the market conditions are favorable.
Even though millions may aspire to becoming homeowners this year, not everyone will be able to achieve this goal. Rising mortgage interest rates, tight inventory and affordability problems in certain areas could make it difficult for potential buyers to find a suitable home as the market begins to gear up for the spring selling season.
The survey covered 20 large metro areas, and in 19 more than 5% of residents responded that they wanted to buy a home in the next year. Aspirations for home ownership were particularly strong amongst those currently renting, with approximately 10% of renters saying they would like to buy within the next year. Confidence is high, as most felt they could afford the costs of owning a home. If all these people were to actually purchase property during the next 12 months, it would mean sales of more than 4.2 million homes to first-time buyers, roughly twice the amount sold last year.
Amongst current renters, the areas with the highest levels of homeownership hopes were Las Vegas, Atlanta and Miami, three areas that were particularly badly hit by the housing market crisis. In spite of their hopes to buy a home, market conditions are still somewhat mixed. Even though inventory levels are up compared to a year ago they are still well below the levels needed for a healthy market. In addition recent data shows that construction is likely to be more focused on multifamily rental housing as opposed to the type of entry-level properties that would appeal to first-time buyers.
The article in RISMedia points out that for the housing market recovery to continue, it's vital that homes are available and are affordable to meet growing demand. It's interesting to note that even after a horrible housing recession, homeownership is something most people still want to achieve. At the moment the market is becoming more balanced between buyers and sellers, but it is not a quick or smooth process.
The Zillow Housing Confidence Index is a measurement on a 0-100 scale, with readings above 50 showing a positive sentiment. Overall, the measurement for the US was 63.7 at the beginning of the year and out of all the major areas surveyed, 11 had confidence levels higher than this.