Low mortgage rates that have provided some relief from the rising rates at the end of 20198 have given some confidence to the housing market.
But affordability issues remain a challenge for buyers along with the ongoing low supply as many homeowners remain wary of listing in the current climate.
The biannual First American Real Estate Index reveals the insights of title insurance agents and real estate professionals and suggests a change from the expectation for 2019 expressed late last year.
“According to 57% of title agents and real estate professionals surveyed, the unexpectedly low mortgage rates of 2019 have increased home buyer demand in their market. In fact, only 15% disagreed with this sentiment,” said First American’s chief economist Mark Fleming.
But the lower rates, while helping to stimulate demand and boost affordability, the latter is still a key challenge.
“40% of survey respondents indicated that affordability is the primary obstacle to becoming a homeowner – this is not surprising as house prices nationally continue to grow, albeit at a slower pace in 2019,” added Fleming.
The next highest-rated obstacles to becoming a homeowner were the limited inventory of homes they like (30%) and down payment (22%).
“Affordability has overtaken the lack of supply as the primary obstacle to homeownership, according to a year-over-year review of survey results,” said Fleming. “When we asked this question a year ago, survey respondents slightly favored the limited inventory of homes as the primary obstacle over overall affordability.”
Are homeowners feeling better about selling?
The dual factors that were deterring homeowners from listing their homes in late 2018 – fear of not finding a home to move to and losing their low mortgage rates – have eased in 2019.
“Not only have concerns over limited supply eased as an obstacle to homeownership, homeowners appear to be more willing to list their homes for sale because they are more confident in finding a home to buy, according to our survey,” said Fleming. “When asked what had the greatest influence on the decision by homeowners to list their homes for sale this spring, most title agents and real estate professionals indicated the supply of alternative homes at the desired price point has increased.”
However, potential sellers remain concerned that they may not find a home to move to according to 69% of survey respondents.