The rental real estate market has been booming in recent years, however things may be set to change. Many families which are renting are finally ready to buy a home, according to Zillow.
After years of renting, many typical renters have saved for a down payment, and are house-hunting in earnest with the added help of more favorable lending conditions.
We are currently seeing the front end of a wave of some 5.2 million renters who plan to buy homes in the next year, according to the Zillow Housing Confidence Index (ZHCI), which is sponsored by Zillow and developed by Pulsenomics LLC.
That’s an almost 25-percent boost from the same time last year.
While homeowners continue to be more confident overall than renters, statistics show renter confidence is growing quicker than homeowner confidence in 14 of the 20 large metropolitan cities surveyed.
People with the most confidence about the housing market are in San Jose, Miami and San Francisco. Confidence rose the most since last year among respondents in Dallas, Detroit and St. Louis.
“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,” says Zillow Chief Economist Stan Humphries.
Still, Humphries cautions, wanting to buy is not the same as being able to. “Saving a down payment, qualifying for a mortgage and finding an affordable home to buy all remain formidable challenges for many,” he says.
The ZHCI polls homeowners and renters about housing market conditions, expectations for the future and their attitudes toward homeownership in general, across 20 large metro areas. You can read more about the results at http://www.zillow.com/research/housing-confidence-jan-2015-9097/.
Survey respondents were most confident in these places:
1. San Jose, CA
2. Miami, FL
3. San Francisco, CA
4. Dallas, TX
5. Los Angeles, CA
6. San Diego, CA
7. Washington, DC
8. Denver, CO
9. Phoenix, AZ
10. Seattle, WA
As renters begin to gain confidence and enter the market as buyers, the usual real estate cyclical trend will continue, rent values should see a drop in 2015 and 2016, while rental vacancies will continue to climb.
