Potential homebuyers are less convinced that now is the right time to take a step onto the property ladder despite strongly believing in homeownership.
While 79% of non-homeowners say they still desire owning their own home, 67% say the market is currently unhealthy; and only 52% believe that owning a home is a “secure and smart investment”.
Each of those figures from ValueInsured’s Modern Homebuyer Survey represent a drop of around 10 percentage points compared to a year ago.
Among homeowners there is also a 10 percentage point drop in the share who say the market is healthy (67%) and a 6 point drop in the belief in homeownership as an investment (77%).
The ValueInsured Confidence Index registers 62.0 in the second quarter of 2018, a 4.9-point drop from Q1 2018.
Both homeowners and non-homeowners reported sizeable drops, to 69.3 (-5.0) and 54.7 (-5.7) respectively. Millennial homeowners reported the largest decline among key segments with a 6.7-point drop.
"Housing confidence – as do home prices – goes up and down, but what's noteworthy now is the decline among homeowners, in particular millennials,” said Joe Melendez, ValueInsured’s CEO. “Many are stuck in homes they have outgrown and cannot upgrade, which explains the inventory shortage we see at the starter-home level."
Affordability, interest rates, rising prices are the concerns
Three key concerns are lowering sentiment currently.
Both homeowners who want to sell and then buy, and potential first-time buyers, report lower confidence in their ability to afford a home.
Rising interest rates are a worry for all as well with 59% believing that a 30-year mortgage will reach a 5% rate by 2019, 13% think it will be 6% by the end of 2019.
Almost two thirds of respondents think there will be a house price correction within 24 months, and 58% of millennials believe if they buy now, their home will be worth less by the end of next year.
"This is a pivotal time with rising prices and rates weighing heavily on consumers," Melendez said. "Flat to declining home sales volume indicates sellers and buyers are not exactly jumping in with both feet. More of them could be moved off the sidelines if perceived security and confidence in home buying could be restored."
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