A new report from Zillow shows that consumers were more confident in the broader U.S. housing market as of the most recent check, with renters in particular more ebullient than before about the market’s going-forward prospects and willing to buy a house in the near future.
The latest Zillow Housing Confidence Index (ZHCI) shows that over five million renters are likely to purchase a new home within the next year, and that renters and homeowners alike are quite confident about the housing market’s prospects, as compared to last year. Cities where consumers were most confident overall included San Jose, Miami, and San Francisco, while the biggest improvement in confidence was reported among consumers located in Dallas, Detroit, and St. Louis.
Overall, homeowners were shown to be more confident than renters, but renter confidence had improved markedly, with this metric growing in 14 of the 20 metropolitan areas covered by Zillow’s report.
“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,” explained Zillow chief economist Stanley 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.”
Humphries also pointed out that more young renters are confident about buying and owning a home, as compared to last year’s figures. In the new report, 66.2 percent of renters aged 18 to 34 said owning a home is the best long-term investment; this is a considerable increase from last year’s 61.4 percent reading.
Zillow’s overall reading for housing market confidence showed homeowners’ confidence rating at 70.6 in January 2015, up 3.7 points from the previous January, and renter confidence at 62.4, up 4.4 points on a year-over-year basis. Overall, confidence among owners and renters was at 67.4, an increase of 3.6 points from the 63.8 reading recorded in January 2014. Readings of over 50 indicate general confidence in the housing market.