Two Thirds of Americans Still View Real Estate As A Good Financial Investment

Insights from the SCE Housing Survey

The latest findings from the Federal Reserve Bank of New York’s 2024 SCE Housing Survey shed light on households' expectations regarding home price growth, mortgage rates, rental market dynamics, and perceptions about housing as an investment.

Anticipated Home Price Growth

Households participating in the survey anticipate a significant uptick in home price growth over the next 12 months. Expectations have risen to 5.1%, marking a notable increase from the 2.6% forecasted a year ago. While this is the second-highest reading in the survey's history, it remains below the series high of 7% recorded in 2022.

The surge in home price growth expectations is widespread across demographic groups, with particularly large increases observed among respondents residing in the South.

Mortgage Rates

Households foresee mortgage rates climbing to 8.7% in the next year and reaching 9.7% in three years' time—both figures representing series highs. Its worth noting that these pessimistic projections don’t line up with forecasts from the majority of economists, who anticipate rates to decline over the next several years as inflation eases.

The survey reveals that homeowners' expected probability of refinancing in the next year has rebounded slightly from last year, reaching 6.3%. However, this figure remains below the pre-pandemic average of 10.4%, indicating subdued activity in the refinancing market.

Rental Market Outlook

Households expect rents to rise by 9.7% over the next 12 months, signaling a reversal from last year's decline. Additionally, renters' perceptions about obtaining a mortgage have deteriorated, with a substantial majority (74.2%) believing it is somewhat or very difficult. This represents a significant increase from last year and reflects renters' growing concerns about the prospects of future homeownership affordability.

Housing as an Investment

While attitudes toward housing as a financial investment remain mostly positive, there has been a slight weakening compared to previous years. Approximately 67.1% of respondents view buying property in their zip code as a "very good" or "somewhat good" investment, slightly below readings from the past three years but still above pre-pandemic levels.

(Source: nahb.org)

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