Thursday Thoughts on Leadership: Our Latest Homeowner Sentiment Survey

By Gino Blefari

This week my travels find me in Southern California for leadership meetings, our HSF Affiliates December Town Hall meeting and our team’s annual holiday celebration. I arrive in Irvine at the ideal time, just as we released Berkshire Hathaway HomeServices’ Q4 Homeowner Sentiment Survey to wrap up the year with a consumer-centric bow.

The major headline of our latest survey results found interest rates are on the minds of consumers, with optimism reigning for all demographics; current and prospective homeowners—particularly Millennials—remain enthusiastic about the state of the U.S. real estate market, even as they expressed concern over the prospects of rising interest rates.

In fact, those concerns are not unfounded. Wednesday the Federal Reserve announced a raise in interest rates, the second increase in 10 years and the first since last December. Effective Dec. 15, 2016, the FOMC voted unanimously to raise the target range for the federal funds rate to .25% to .75%.

What does this mean for real estate? Well, to answer that question, let’s remember although a rate hike can grab headlines and easily create unease among prospective homeowners, this increase actually signals an improving, healthy U.S. economy and that’s always a good thing for real estate.

Though first-time home buyers may not have the same perspective as those who have owned homes for decades, rates—despite the latest rise—remain near historic lows. Translation: It’s still an excellent time to buy a home.

Here are a few more highlights from our survey I found particularly interesting:

• 66% of current homeowners and 63% of prospective homeowners view the U.S. real estate market favorably—a sentiment that has remained steady throughout 2016.
• Millennials (in our survey, defined as people ages 18-34) were the most optimistic generation, with 74% reporting a favorable view, a statistic representing a 15-percentage point jump year-over-year.
• Two-thirds of Gen-Xers (ages 35-50) also expressed a favorable view—an 8-percentage point increase since the same time last year.
• In terms of interest rates, 76% of current homeowners and 79% of prospective homeowners cite increasing interest rates as a challenge impacting the real estate market today; these figures represent 16- and 18- percentage point jumps, respectively, from the same time last year.
• Of current homeowners, 44% and 70% of prospective buyers said they would feel anxious if mortgage rates went up, representing 11- and 8-percentage point jumps from last year, respectively.

So, what’s the message? It’s up to us as real estate professionals to continue guiding clients in understanding overwhelmingly positive fundamentals — low mortgage rates, favorable property valuations, tax benefits and last but not least, safety and sanctuary in the place you call home. This message is a simple one: Real estate remains one of the most attractive long-term investments a consumer should make.

GINO BLEFARI is CEO of HSF Affiliates LLC. You can follow Gino on Facebook, Instagram and Twitter.