Renters and home owners both expect prices to continue to increase in the coming year, but renters expect to face more price growth, according to a consumer survey by the New York Federal Reserve Bank, which asked respondents about the price expectations of homes in their ZIP code.
Both renters and home owners expect home prices to increase by 4.4 percent over the next 12 months. The average home price growth expectations among renters was about a percentage higher than those of owners. The average year-ahead expectation for renters was 5.2 percent – compared to 4.1 percent for home owners, the survey showed.
REALTORS® are also growing more upbeat, expecting prices to increase at a slightly faster pace in the next 12 months, according to the latest REALTORS® Confidence Index. Those surveyed expect the median price growth in the next 12 months to be 3.9 percent nationwide. Colorado REALTORS® reported the highest price expectations, with median growth expected at 6 percent, followed by the District of Columbia at 5 percent. REALTORS® also expected some of the highest increases in home prices, averaging 4 to 5 percent, in Washington, Oregon, Nevada, Florida, Georgia, Michigan, Hawaii, and New Hampshire, according to the survey.
As prices grow, consumers’ attitudes toward housing as a financial investment remain positive, according to the Fed survey. More than 60 percent of renters and owners believe that buying a property in their ZIP code is a good investment, while only 10 percent considered it a bad investment. What’s more, the percentage of home owners who believe housing is a good investment rose from 58.5 percent in the 2014 survey to 63.2 percent in the most recent survey.
Source: “Fed Survey: Renters More Bullish on Prices Than Owners,” RISMedia (June 7, 2015) and “REALTORS® Confidence Index,” REALTOR.org (April 2015)