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Buy a home? No thanks, I’ll rent

Zillow survey suggests improvements in lending standards and home values may not be enough to entice renters into homeownership

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If you think that changes in mortgage lending restrictions and improving home values will entice people to buy homes, think again. According to a recent Zillow Home Price Expectations survey, many experts believe renters are content to stay where they are — at least in the near term.

The survey, sponsored quarterly by Zillow and conducted by Pulsenomics LLC, polled more than 100 housing experts about their expectations for mortgage availability, home values and housing trends.

Panelists predicted slowing home value appreciation and looser lending restrictions in the next year. Despite that, 44 percent said they thought renter households would continue to outpace homeowner households, largely because of financial barriers such as large debt burdens and slow wage growth.

Another 42 percent of the experts surveyed said looser credit restrictions, an improving economy and the rising cost of renting would drive more people to buy in the next one to two years.

“Renters face several challenges,” said Zillow Chief Economist Stan Humphries. “They need enough money on hand to start to buy homes. Even as mortgage credit becomes easier to obtain and home prices level off, renters are confronted with slow income growth and high rental rates. In addition, they face sometimes fierce competition for very few available homes in the market.”

Most of the panelists said they expect home values to level off in the next several years. The panel expected home values to rise 4.3 percent in 2015, to a median of $184,615. They expected that the average annual growth rate through 2019 would slow to 3.6 percent.

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Only 7 percent of survey respondents said the current mortgage lending environment is too lax. Almost half, or 47 percent, said it is too restrictive, and 46 percent said it is about right. More than 60 percent expect regulations to loosen, with some panelists expressing concern about a return to bubble-era lending policies: Four percent said mortgage restrictions will become too lax in the next year, and 25 percent said they will become too lax within the next five years.

"Even as mortgage credit becomes easier to obtain and home prices level off, renters are confronted with slow income growth and high rental rates." - Zillow Chief Economist Dr. Stan Humphries

Pulsenomics is an independent research and consulting firm that specializes in data analytics, and new product and index development for institutional clients in the financial and real estate arenas.

Email Amy Swinderman.