Given the precipitous fall in the home ownership rate since the recession hit, economists and others have wondered whether Americans were finally giving up on the old-fashioned notion that adulthood and financial success hinged on home ownership.
Turns out, reports of the Death of the American Dream may have been greatly exaggerated.
About 10 percent of current renters recently polled by Zillow told the real estate website they would be likely to buy a home in the next year and were confident they had the financial means to afford the purchase.
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Such sentiment may not be wholly realistic, of course: If all renters who indicated they wanted to buy actually did so this year, that would total 4.2 million first-time home buyers – more than double the amount in 2013. Buyers are also facing very real headwinds, such as tight inventory, rising mortgage rates, and falling affordability, as the real estate market cools after a gangbuster recovery last year.
“For the housing market to continue its recovery, it is critical that homes are both available and remain affordable to meet the strong demand these survey results are predicting, particularly from first-time homebuyers,” Zillow chief economist Stan Humphries said in a statement.
While inventory is up compared to last year, it remains relatively tight. Nationally, there is a 4.7 months’ supply of homes on the market. A six-month supply is considered healthy. Mortgage rates are currently around 4.2 percent nationally, up from lows of 3.3 percent last year, pushing down affordability. In several California markets that have seen large price increases, homes are already unaffordable for lower-income and first-time buyers, according to Zillow.
Surprisingly, the cities with the highest home ownership aspirations were among the hardest hit by the recession: Miami, Atlanta, and Las Vegas. Unfortunately, home prices have rebounded so strongly since the bust that it’s getting harder for first-time buyers to purchase a house: Affordability in all three metro areas was down more than 20 percent in 2013 from 2012, according to the National Association of Realtors.
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