Brokers should be happy to know that consumers are optimistic about both the U.S. economy and the real estate market, according to the latest Berkshire Hathaway HomeServices quarterly
Homeowner Sentiment Survey. However, the possibility of interest rates rising has many potential home buyers concerned, especially millennials.
According to the survey, 68 percent of prospective homeowners aged 18 to 34 say they are experiencing a sense of urgency to buy a home before mortgage rates rise, and one in five say they have a desire to buy now. However, 55 percent of this group also reported "feeling discouraged" about buying a home due to rates potentially rising.
Nearly half of the 2,521 current and prospective homeowners who responded to the survey say they believe low interest rates are the reason for the strong real estate market, and 43 percent said it has helped raise real estate values. So it's no wonder rate increases are a significant concern.
"The sense of urgency expressed by millennials shows they understand the advantages of locking in a low mortgage rate now," says Gino Blefari, president and CEO of Berkshire Hathaway HomeServices. "However, we also recognize rising interest rates can make the homebuying process feel challenging. It's important to remember that interest rates and mortgage rates remain low by historical standards, and with guidance from a skilled real estate professional, prospective buyers can be empowered to find a home that meets their needs and financial objectives."
Tight inventory is another issue worrying buyers, especially those shopping at entry-level price points. Seventy percent of survey respondents say they're willing to wait until they can buy a home that more closely suits their needs, even if interest rates rise in the meantime. "Younger buyers are telling us they don't necessarily want a traditional starter home [that has to be fixed] over time," Blefari says. "They want move-in ready without the hassles and hammers."
However, buyers are thinking beyond the features of a home, with 50 percent saying their top consideration is whether a neighborhood is friendly, according to the survey. Respondents indicated that the school district (41 percent), financial considerations (39 percent), and perceived investment value (37 percent) were also important considerations.
When it comes to specific home amenities, respondents say they most desire a large walk-in closet, followed by patios and balconies and hardwood floors. As for the most important home trends, energy-efficient appliances and smart-home features such as learning thermostats and automated lighting won out in the survey.
—Erica Christoffer, REALTOR® Magazine
