The number of people who believe now is a good time to buy a house is dropping, according to findings released by the National Association of Realtors (NAR).
In a survey, NAR found only 34 percent of homebuyers strongly believe the last quarter of 2018 is a good time to buy, down from 39 percent in the third quarter and 43 percent from a year ago. 63 percent believe that now is a good time to buy – 34 percent believe that strongly and 29 percent believe that moderately.
Meanwhile, 37 percent believe that it is not a good time to buy. Confidence in buying a home has not been this low since NAR began measuring consumer sentiment in 2015.
The change is fueled mostly by years of unabated growth in home values in many parts of the country, according to NAR. Between 2012 and 2018, median home prices rose 44 percent while average hourly wage earnings only grew by 16 percent.
“Consistently fast-rising home prices well in excess of income growth over recent years have left buyers frustrated while slowly enticing would-be sellers to consider listing,” said NAR Chief Economist Lawrence Yun in a statement.
Still, many people are holding out hope that the situation will improve in the coming months and years. Of the 2,710 households polled, 59 percent believed the economy would improve and increase their chances of buying a home in the future.
The optimism, however, is strongest among those living in urban areas and making more than $50,000 a year. Only 29 percent of those who do not presently own a home said it would be “very difficult” to qualify for a mortgage while 30 percent believe buying one would be “somewhat difficult” given their financial situation.
The findings suggest that buyers are not simply holding off for a better deal on a house, but, instead, believe homeownership is out of reach due to high home prices, lack of affordable options and their inability to qualify for a mortgage, Yun said. One solution could involve taking advantage of so-called “Opportunity Zones,” a program passed by Congress as part of the Tax Cuts and Jobs Act of 2017 to encourage investment in low-income communities.
“Perhaps some communities designated as Opportunity Zones can draw real estate developers using tax incentives to build affordable housing,” Yun said