In a recent survey (June 2017) conducted by the National Association of Realtors, 76 percent of homeowners said they felt the economy was getting better or staying the same. More than 71 percent of people believe it is a good time to sell a home. Most respondents said if they planned to buy a house in the next year, they wouldn’t be worried about their job situation or getting a mortgage.
The survey found that homeowners who survived the Great Recession are comfortable, and they are being cautious with the equity in their home. They’re also staying put longer. Between 1985 to 2008, the median tenure was six years. However, since the Great Recession homeowners are staying nine years, an increase of almost 50 percent.
Falling home prices during the Great Recession left many homeowners in a negative equity situation. While most homeowners have recovered the lost value in their home, the uncertainty of the economy left a lasting impact. Post-recession, homeowners are much more fiscally conservative when it comes to making a move. This, despite the fact that 98.2 percent of homes in Washington with a mortgage are now in a positive equity situation with 90.2 percent of homeowners having at least 20 percent equity. Homeowner equity has more than doubled in the last five years, according to CoreLogic. In the first quarter of 2017 alone, the average homeowner in Washington State added $38,000 of value to their home’s equity, according to CoreLogic.
Normally, when home equity is high and interest rates are low, there is an increase in real estate sales. Not so in 2017. In a press release from the Northwest Multiple Listing Service, the total inventory of homes available for sale in June declined 13.9 percent from one year ago, despite the fact the median price in King County is up 18.6 percent from a year ago. With home equity at a record high, and homeowners believe this is a good time to sell, why aren’t more people selling?
It turns out homeowners are worried about the future. Housing affordability was ranked fourth in the top-five issues that concern Americans, behind the lack of affordable health care; low wages and debt making it hard to save; and heroin and opioid drug abuse, and ahead of job layoffs and employment.
The most surprising finding of the survey was that the unsettling political environment in Washington, D.C. may be a key factor in why so few homeowners are selling. The survey found that half of the respondents considered uncertainty in Washington D.C. a bigger worry than whether they could get the price they wanted if they sold their current home. Among the issues most worrisome to homeowners is tax policy, deductibility of mortgage interest and health care.
When asked in the survey, “what would worry you most when it comes to buying a home in the next 12 months?” 50 percent of respondents ranked the answer “I’m afraid of what is going on in Washington D.C. right now” as the top or second-biggest fear.
In a separate NAR survey, conducted in July 2017, 84 percent of Americans believe purchasing a home is a good financial decision –the highest number since 2007. The gap between those wanting to purchase a home and those who are willing to sell a home is wide, and there’s no indication that the uncertainty in Washington, D.C. will be improving anytime soon.