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Take a look at the results of Zillow’s annual Housing Confidence Index, which includes research on how renters across different regions of the U.S. expect the housing market to evolve in the next year. Gaining insight into renters’ attitudes about the market gives us a better gauge of rental housing market health across the nation.
The Zillow Housing Confidence Index, sponsored by Zillow and developed and administered by Pulsenomics LLC, is based on more than 10,000 interviews in 20 real estate markets. Know what to expect in your region in the upcoming year with the breakdown below. The Confidence Index is measured on a 0 to 100 scale, with readings above 50 indicating positive sentiment.
Taker a closer look at the data by visiting the Zillow Research Blog.
West
Homeowners on the West coast remain some of the most confident in the country, but rising home prices have also caused renters to feel less confident in the housing market and their future homeownership prospects. In the cities that were hit hard by the housing crisis, young adults remain skeptical about the financial benefits of homeownership.
Las Vegas: While housing confidence is edging up modestly for both renters and homeowners, the one category that fell was the renters’ Homeowner Aspiration Index. Increasing home prices are resulting in decreased confidence in future homeownership: home values increased by 13.4 percent in the past year, and are projected to grow another 6.1 percent in the next year.
Los Angeles: Homeowners and renter confidence in the housing market is strong in Los Angeles. Los Angeles area homeowners have the second-highest confidence level in housing among all 20 metros surveyed, right behind San Francisco. 82 percent of young adults ages 18-34 said they are confident that they will one day buy a home, with 8 percent of Los Angeles renters planning to buy a home in the next year. Don’t be fooled by the low percentage: 8 percent translates to 480,000 new homeowners in the Los Angeles metro.
Phoenix: The Phoenix metro area saw falling housing market confidence from both homeowners and renters due to the current state of the market. Home values increased just 1.2 percent in the last year, contributing to the decreased confidence and outlook for next year. Renters’ homeownership aspirations have increased, however, with 14 percent of Phoenix renters expecting to buy a home within the next year.
San Diego: Housing market confidence decreased across the board in San Diego for both renters and homeowners. However, millennials in San Diego were much more likely than other age groups to believe that buying a home is a smart financial decision.
San Francisco: Housing confidence in up significantly in almost all categories in the San Francisco metro area, with the exception of renters’ view of the current market conditions. Young adults in San Francisco are not very optimistic about the financial returns to homeownership, even though they live in one of the nation’s strongest housing markets.
San Jose: Homeowners and renters had opposing views when it came to housing market confidence. Overall, confidence fell in the San Jose area largely due to decreased homeownership aspirations among current renters. 54 percent of San Jose-area renters are confident they will be able to purchase a home in the future, with 6 percent of renters expecting to buy a home in the next year – translating to 40,000 new homeowners in the San Jose metro area.
Seattle: Housing confidence in the Seattle metro area rose strongly in 2014, topping the list for biggest improvement among the 20 metros surveyed. The one exception was the renters’ Home Aspirations Index, which fell by one percent for a total of 54.4 points. Renters in the Seattle area had the lowest confidence when it came to their future ability to purchase a home; millennials are also among the most skeptical in the country about the financial and social benefits of homeownership.
South
While housing confidence in the South is below the confidence levels of owners in the West and Northeast, it has been on the upswing and is improving. Renter confidence is higher here than in the rest of the country.
Atlanta: Housing market confidence improved for both renters and owners in the second part of the year. Renter confidence increased sharply by 11.7 points, the highest overall renter confidence among the 20 metros surveyed. Atlanta renters are optimistic about the housing market in the near term, with 17 percent – 280,000 current renters – expecting to buy a home in the next year.
Dallas: Confidence moved in the opposite direction for renters in the Dallas-Forth Worth metro area, with renter confidence falling due to current market conditions and decreased homeownership aspirations. About 15 percent of Dallas renters still expect to buy in the next year, however, which would create 330,000 new homeowners.
Miami: Decreased homeownership aspiration contributed to renters’ falling confidence in the Miami housing market. Miami renters registered a drop of seven points on the Homeownership Aspiration Index, the largest decrease in all 20 metros surveyed.
St. Louis: Renter confidence in the housing market increased dramatically in St. Louis, with the largest improvement in renter assessment of current market conditions. In the next year, 14 percent of renters said they’ll be buying a home, translating to 100,000 new homeowners in the St. Louis metro area.
Tampa: Housing confidence improved modestly in Tampa, but renter confidence fell largely due to a declining view of current market conditions. In the last year, home values increased 11.8 percent in the Tampa metro area, and are predicted to rise by 3.2 percent in 2015.
Read about housing confidence in the Northeast and Midwest in Monday’s blog post.
