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HOME PRICE GROWTH EXPECTATIONS DECLINE, BUT CONSUMERS’ OUTLOOK ON HOUSING REMAINS POSITIVE


HOME PRICE GROWTH EXPECTATIONS DECLINE, BUT CONSUMERS’ OUTLOOK ON HOUSING REMAINS POSITIVESource: Federal Reserve

The results from the Federal Reserve Bank of New York’s latest Survey of Consumer Expectations Housing Survey reveal that there was a modest decline in home price growth expectations. However, the majority of households still view housing as a good financial investment. Mortgage rate expectations have declined since last year’s survey, and renters’ perceived access to mortgages has become easier.

Making sense of the story
  • Average home price change expectations at both the one- and five-year horizons declined from the 2015 survey. For example, the mean one-year ahead expected change in home prices in the 2016 survey was 3.3 percent, nearly a full percentage point below the mean forecast in the 2015 and 2014 surveys.
  • Attitudes toward housing continued to remain positive: 59.2 percent of respondents think that buying property in their zip code is a (very or somewhat) good investment, and 13.2 percent think it is a bad investment.
  • However, attitudes have become somewhat more polarized over the last three years: 21 percent of respondents think that housing is a very good investment (compared to 14 percent in 2014), and 2.9 percent think it is a very bad investment (compared to 1.3 percent in 2014).
  • The average probability of buying a home, conditional on moving within the next three years, rose to 63.0 percent from 59.9 percent in 2015.
  • The increase was particularly pronounced for renters, whose average probability of buying their next home increased from 43.2 percent to 48.9 percent. 
  • Renters continue to perceive obtaining a mortgage (if they wanted to buy a home) as difficult, with two thirds stating that it would be somewhat or very difficult to get a mortgage.
  • Renters continue to report a strong preference for owning. The share of renters who report preferring or strongly preferring to own instead of rent (if they had the financial resources) rose to 74.1 percent from 68.5 percent in 2015.

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