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Confidence in the US residential property market is on the rise, especially among those renting homes, new research shows. More than five million renters say they're likely to buy a home in the next year, according to the latest Zillow Housing Confidence Index (ZHCI) and overall both renters and home owners expressed more confidence in the housing market this year than last year. Americans are most confident in the housing market in San Jose, Miami and San Francisco while over the last year, confidence rose the most in Dallas, Detroit and St. Louis. Home owners remain more confident than renters, but renter confidence is growing faster than homeowner confidence in 14 of 20 metro areas surveyed. A breakdown of the figures show that more than 12% of current renters nationwide, roughly 5.2 million, said they plan to buy in the next year, an almost 25% jump from the same time last year, when 4.2 million renters said they had plans to buy within 12 months. The ZHCI, sponsored by Zillow and developed by Pulsenomics LLC, polls homeowners and renters about housing market conditions, expectations for the future and their attitudes toward homeownership in general, across 20 of the large metro areas in the United States. Thanks to historically low mortgage interest rates and home values below peak levels, buyers can expect to spend about 15% of their monthly income on a mortgage payment, compared to 22% historically, according to Zillow research. Typical renters should expect to pay 30% of their income to rent, compared to 25% a generation ago. ‘As home affordability continues to look great and rental affordability looks abysmal, many current renters clearly seem to be re-thinking their attitudes toward homeownership, and are expressing more confidence in the overall housing market as a result,’ said Zillow chief economist Stan Humphries. ‘But while this confidence is heartening, it's important to inject a note of reality as not all renters who want to buy this year will be successful. Saving a down payment, qualifying for a mortgage and finding an affordable home to buy all remain formidable challenges for many,’ he explained. ‘Among all renters surveyed nationwide, 59.7% said they think buying a home is the best long term investment a person can make, compared to 56.9% at the same time last year. This improved long term outlook was especially evident among younger renters. Among all 18 to 34 year old renters, 66.2% said owning a home was the best long term investment, compared to 61.4% last year. The index is measured on a 100 point scale, with readings more than 50 indicating general confidence. Overall, housing market confidence is rising more quickly among renters than home owners. Among only home owners, headline confidence rose 3.7 points year on year, to 70.6 in January. Among renters only, overall confidence rose 4.4 points in the past year, to 62.4. Confidence among all owners and renters rose 3.6 points, to 67.4. Although survey respondents in most… Continue reading →
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