In a recent 2024 housing survey by the New York Federal Reserve, prevailing consumer predictions paint a picture of a continued rise in housing prices. Home prices are anticipated to grow by 5.1% this year, marking the second-highest prediction since this annual survey's inception in 2014.
This inflationary trend extends to the rental market as well, with respondents expecting a potentially steep 9.7% annual increase. This shift in sentiment reverses last year’s hopeful forecast that predicted a cooling in both rental and housing prices.
Investor optimism is waning, with fewer respondents - 67.1% - seeing housing as a lucrative investment, marking a three-year low. Meanwhile, the percentage of respondents considering housing as a poor investment witnessed a noteworthy increase.
Renters' aspirations to transition into homeownership have dimmed, as only 40.1% see a possibility of owning a home - the survey's all-time low and a dip from 44.4% just the previous year.
This decline in potential homebuyers could be attributed to market barriers like exorbitant home prices and escalating mortgage rates, making housing unaffordable for many. Projections do not paint a rosy picture either, with anticipated one-year mortgage rates at 8.7% and three-year rates potentially hitting 9.7%. These figures follow an existing trend of rising borrowing costs this year, after last fall’s short-lived decline.
Complementing the survey, the New York Fed explored the “lock-in” effect, where homeowners are reluctant to sell properties in a high-interest-rate environment, fearing they might lose their current low mortgage rates. The study found that an additional 7.4% of respondents would consider selling if they could secure their present rates. This percentage was notably higher among homeowners with mortgage rates under 3%. However, fifty percent of respondents clarified that mortgage rates were not at the forefront of their decision-making regarding relocation.