Story at a glance
- The Federal Reserve Bank of New York released results from its 2022 SCE Housing Survey.
- The results revealed that homeowners expect home prices to grow 7 percent over the next 12 month.
- Renters not only expressed a lower probability of ever owning a home, they also expected rent increases of 11.5 percent over the next year.
As the housing market remains volatile, with high mortgage rates and home prices, a new survey reveals more Americans are beginning to feel more pessimistic about the future of their own housing options.
The Federal Reserve Bank of New York released results from its 2022 SCE Housing Survey on Monday, compiling responses from about 1,200 Americans, with about 76 percent current homeowners and 25 percent current renters. It showed that while households expect strong home price growth of 7 percent over the next 12 months, renters felt a lower probability of ever owning a home, their reported likelihood of owning falling to 43.4 percent.
Last year, the average likelihood of owning a home was at 51.6 percent—with 2022 showing the first reading below 50 percent in the survey’s history.
Renters also indicated they expect rent increases of 11.5 percent over the next 12 months, compared with just 6.6 percent in February 2021.
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That’s consistent with a separate report from Realtor.com which found rent prices have spiked this year following a significant dip in 2020 and 2021 amid COVID-19. It found median rent in the 50 largest metros reached a new high of $1,792—a 17 percent increase from 2021.
According to the New York Fed, attitudes toward housing as a financial investment remained strong, only slightly weakened from last year. About 71 percent of all survey respondents said buying property in their zip code was a “very good” or “somewhat good” investment. Last year, about 73.6 percent of respondents indicated the same responses.
However, the share of respondents reporting that housing is a “bad” or “somewhat bad” investment rose about 3 percent—up to 9.9 percent compared to 6.5 percent a year ago.
Those beliefs were reflected in how respondents envisioned their next home purchase, with the average expected probability of buying a home if the household were to move within the next three years falling sharply to about 61 percent. Last year, about 69 percent of people indicated the same response.
That marks the lowest average expectation of buying a home if a household were to move since 2015.
The current rise in mortgage rates doesn’t help, as the interest rate for a 30-year fixed-rate mortgage hit a 10-year high of 5 percent last week.
“As Americans contend with historically high inflation, the combination of rising mortgage rates, elevated home prices and tight inventory are making the pursuit of homeownership the most expensive in a generation,” said Sam Khater, mortgage administrator Freddie Mac’s chief economist.
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Published on Apr. 19, 2022