Real estate pros get confidence boost, report surge in homebuying demand

Rate drop causes a spike in confidence

Homebuying demand is up. In fact, according to a new survey of real estate pros, nearly 60 percent say recent drops in mortgage rates have caused demand to spike in their areas.

Rates, more inventory play a role

According to the newest First American Real Estate Sentiment Index, mortgage rates are causing homebuying demand to surge in many markets across the country. When asked if low rates have caused more buying activity in their areas, almost 60 percent sad yes. Only 15 percent of title agents and real estate professionals disagreed with the statement.

Still, despite lower mortgage rates, most surveyed said that affordability is still the biggest obstacle for buyers. More than 40 percent cited affordability as the No. 1 issue facing their clients.

Incomes are finally outpacing housing costs in all major cities

Shortages in housing inventory ranked as the second-biggest obstacle. It previously held the top spot in recent surveys.

As First American’s chief economist Mark Fleming explains, “Title agents and real estate professionals no longer view limited inventory as the primary obstacle to becoming a homeowner. The main burden — affordability — confirms the strong sellers’ market conditions from 2018 have continued in many markets in early 2019, as demand outpaces supply and prices continue to rise.”

Housing inventory is up — especially on starter homes

Homeowners more willing to list their properties

Easing inventory shortages have helped existing home sales, too, which rose in May by 2.5 percent.

According to Fleming, “Many homeowners were imprisoned in their current home by the fear of not finding a home to buy and the fear of losing their historically low mortgage rate. According to our survey of title insurance and real estate professionals, homeowners may finally be on the verge of escaping the ‘prisoner’s dilemma.’”

When asked what the biggest influencer was in a client’s decision to list their home, nearly 37 percent of those surveyed said “supply of alternative homes at the desired price point has increased.”

Another 32 percent said lower mortgage rates were a factor.

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