The status of the real estate market revolves very much around the number of homes sold. Whether the market is seen as up or down largely depends on how many homes are being sold and for how much. If consumers are renting at higher levels than normal, it can negatively affect home sales. On the flip side, if consumers are looking to buy instead of rent, it can be a boost for the market. Thus, an interesting note to consider as we sit here halfway through 2015 is the willingness of consumers to buy instead of rent for their next move. Taking a look at statistics on a macro level reveals a bit of uncertainty regarding this topic.

According to Fannie Mae, the share of consumers who indicated they preferred to buy instead of rent for their next move improved to 63 percent in April following monthly declines during March and February. And, according to Bloomberg, Consumer confidence in the real estate market and other facets of the economy reached an 8-year high in April. These are national statistics, but Houston real estate numbers seem to fall in line with these indicators. Statistically, April was a big month for the Houston real estate market. April numbers were up pretty much across the board as single-family home sales, total property sales, total dollar volume and pricing were all higher than in April 2014.

Despite the positive April numbers though, the U.S. homeownership rate has been in decline. Over 69 percent at the height of the housing bubble, homeownership had fallen all the way to 63.7 percent by the beginning of 2015. That means that, over the last 10 years, the U.S. has lost all of the homeownership gains of the previous 20 years. That steep drop has put the national homeownership rate back where it last was in 1993.

Maybe millennials can help bring the homeownership numbers back up. CultureMap recently published an article discussing millennials and home buying. The numbers show that they do indeed want to buy homes. According to the Zillow Housing Confidence Index, 12.9 percent of millennials want to buy homes versus only 12.1 percent of the population overall. Another Zillow study determined that, at 2014’s end, 70 percent of homes across the nation were affordable for millennials. Homes were a little less affordable for Houston millennials as only 68 percent of Houston homes landed in the study’s affordability zone. This put Houston 59th in affordability out of the 96 metro areas included in the study. This isn’t terrible (as Houston ranks higher than Austin and Dallas), but obviously could be better.

The eagerness of millennials to buy homes as opposed to renting them should be seen as a positive. And, since many of them are new to the job market and/or are just starting their careers, it can be reasonably expected that the median income of the group will rise in the coming years. This means that more homes would fall in their affordability range, which would likely result in more home buying from millennials. If the next group to enter the housing market is similarly interested in buying homes, then homeownership rates could be headed upward.

Looking to buy or sell a home, or just have questions about the market? Always feel free to contact me at 713.829.3052 or cynthia@cynthiamullins.com.

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