As part of our annual look at the year ahead in housing, we commissioned Harris Poll to conduct a survey online in November among more than 2,000 Americans about their housing hopes and fears. We noticed some striking trends. Among them:
The American Dream of homeownership is not only alive and well, but continues its resurgence. The share of Americans who dream of owning a home is again up since last year: 1 percentage-point to 75%, and up 2 points among millennials to 80%.
More than one in five (22%), Americans think it will be harder to get a mortgage in 2016 than it was in 2015, perhaps because of looming interest rate increases.
Among millennials telling us that they plan to buy a home, nearly a third (31%) tell us they want to buy within two years, so by 2018. However, jobs and down payments are keys to turning these renters into homeowners within the next 12 months.
In addition to the survey, we at Trulia put together a short list of predictions for 2016:
Housing markets in the West and Northeast that we’ve defined as the Costly Coasts will continue to cool, but will boom in the Southern and Midwestern markets we call the Bargain Belt.
Renters may get some relief in costly metros, where multifamily construction is booming.
Buying will remain a better deal than renting nationally, even if mortgage rates increase. But in several California markets, renting might become cheaper than buying.
We expect housing markets along the Costly Coasts – namely, expensive metros in the West and Northeast– to continue slowing. In many of these coastal metros, affordability has decreased, homes are staying on the market slightly longer, and saving for a down payment can take decades.
Consumers are also starting to feel pessimistic about homes along the costly coasts. Those in the combined regions of the West and Northeast say getting a mortgage to buy or refinance a home will be worse in 2016 than better (10 percentage-points more said it would be worse than better to get a mortgage to buy a home, 7 points for refinance). Likewise, more Americans in these combined regions also said 2016 will be worse for renting a home than better (by a margin of 8 percentage-points).
Taken together, these factors lead us to believe household formation will wane in these metros 2016, which should help moderate price and rent growth. But due to a limited supply of new single-family homes in these metros, we don’t anticipate prices to fall anytime soon.