Photo: Carlos ZGZ/Flickr
Seller confidence is up nationwide, and the vast majority say it is a good time to sell, according to a new survey by the online real estate database Zillow. However, renters are not as confident that now is a good time to buy, creating a confidence gap with sellers that could have an impact on the market going forward.
The Zillow Housing Confidence Index (ZHCI) is a semi-annual study conducted by Zillow and Pulsenomics, an independent economics research firm, based on a national survey of 10,000 American. The ZHCI is calculated for the US in its entirety and 20 large metros.
The national ZHCI rose slightly in July to 67.3 points, which was up 0.4 points from January 2016 and up 0.08 percent year-over-year, indicating an overall confident housing market, says Zillow.
Homeowner confidence reached 71.3 on the ZHCI, up 1 point from January 2016 and 1.7 points year-over-year. Renter confidence fell to 61.2 points, a decrease of 0.3 points from January 2016 and 0.06 points year-over-year.
The 10 point gap in confidence levels between homeowners and renters is the largest recorded by the ZHC, since it first began publishing in January 2014.
Nearly 70 percent of homeowners surveyed said it was a good time to sell, compared to just 38 percent of renters believing it was a good time to buy. This is a sizeable divergence from January 2014 when they were more evenly matched at 50 percent for homeowners and 48 percent for renters.
But even with the majority of homeowners believing the timing is right to sell, some may be holding off because they expect the value of their home to continue to rise, says Zillow. Homeowners may also not want to sell and become buyers in a competitive market, according to Dr. Svenja Gudell, Zillow Chief Economist.
The story with renters is a little different. Renters are feeling more discouraged by the rising prices and tighter inventories, says Gudell. Nearly half of renters in San Francisco and New York were not confident in their ability to afford a home.
The widest confidence gap was, of course, seen in San Francisco with 73 percent of homeowners were confident in the market to sell, compared to a dismal 13 percent of renters feeling confident enough to buy.
On the flip side, Chicago had the narrowest confidence gap, 52 percent of homeowners saying it was a good time to sell and 47 percent of renters feeling confident to buy.
“During the past two years, housing confidence has increased in all but two of the metro areas that we study,” said Terry Loebs, the founder of Pulsenomics, in a press release.
But as the anxieties of prospective home buyers continue to rise, home price appreciation and housing confidence could weaken in the coming months, says Loebs.
You can read the entire Zillow report here.