According to Fannie Mae’s June 2013 National Housing Survey, an influx of Americans are expected to capitalize on the favorable conditions that have become synonymous with today’s market. Despite a sharp increase in home prices, Fannie Mae’s chief economist has acknowledged that more Americans are predicted to purchase a house in the near future. The recent survey results can be attributed to the fact that houses may not remain as affordable as they are now. Potential homeowners should take advantage of the current conditions.
“The spike in mortgage rate expectations this month seems to have had an impact on a number of the survey’s indicators and may increase housing activity in the near term by driving urgency to buy,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.
Despite the recent increase, today’s mortgage rates are still near record lows. In fact, purchasing a home will remain cheaper than renting one until those rates surpass a designated “tipping point” of 10.5 percent on a national average. According to Trulia’s Rent vs. Buy Analysis, it will be a while till buying a home becomes more expensive than renting. Potential homebuyers are willing to test the market, as affordability may become a thing of the past.
“Consumers may recognize that today’s still favorable mortgage rates and homeownership affordability levels will recede over time. Given rising home and rental price expectations and improving personal financial attitudes, more prospective homebuyers may be deciding that now is the time to get off the fence.”
Mortgage rates, while on the rise, still remain near record-lows. Accordingly, mortgage rates increased approximately one percent between early May and the end of June this year. Fannie Mae’s June 2013 National Housing Survey identified an 11 percent increase in the amount of people who believe rates on 30-year fixed mortgages will continue to inflate. With the recent jump, 57 percent of those surveyed believe we will continue to see similar increases in the near future.
Despite the recent spike in mortgage rates, the majority or respondents who participated in the survey believe that home prices will continue to rise. Fifty-seven percent of those involved with the National Housing Survey believe that home prices will go up in the next year, even with higher mortgage rates chipping away at affordability. By comparison, only seven percent think that home prices will go down.
The average 12-month home price change expectation fell marginally from last month’s survey high of 3.9 percent to 3.8 percent, Fannie Mae reported.
While rising mortgage rates may erode affordability, the share of survey respondents who believe that now is a good time to buy fell from 76 to 72 percent. Similarly, those who say now is a good time to sell dropped from 40 to 36 percent.