Independent title agents and other real estate professionals are increasingly confident that transaction volume, home purchases and prices will continue their upward trend during the next 12 months, according to a survey by First American Financial Corp (FAF).
However, FAF’s Real Estate Sentiment Index (RESI) for the first quarter of 2017 also found that independent title agents and other real estate professionals are less optimistic about the refinance market than they were either last year or during the previous quarter.
“Overall, bullishness about transaction volumes in the coming year increased, largely driven by the rise in purchase transaction expectations,” First American Chief Economist Mark Fleming said in a press release. “Overall, year-end confidence in the healthy trajectory of the economy increased purchase transaction expectations, but the likelihood of higher mortgage rates further tempered refinance prospects.”
“The increase in overall transaction volume confidence this quarter suggests that title agents and real estate professionals feel the spring home-buying season looks promising. However, the positive outlook for purchase transactions stands in contrast to a further decline in expectations for refinance transactions over the next 12 months,” Fleming said.
The RESI found:
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Confidence that transaction volume would grow over the next 12 months rose 0.4 percent from last quarter and 0.63 percent from a year ago.
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Confidence that purchase transaction volume would increase over the next 12 months jumped 6.5 percent from last quarter and 3.7 percent year-over-year.
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Confidence that refinance transaction volume would grow over the next 12 months dropped 5.7 percent from last quarter and 2.5 percent from a year ago.
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Prices across all property types are expected to grow by 2.5 percent over the next 12 months, up from last quarter’s expectation of a 1.7 percent increase.
“Despite some regional disparities, title agents and real estate professionals do not expect increasing mortgage rates to have a significant impact on the housing market this spring. Continued good economic news, increasing millennial demand and confidence that buyers will remain in the market even if rates exceed 5 percent bode well for 2017 real estate,” Fleming said.
Fleming said title agents and real estate professionals believe homebuyers will not exit the market if mortgage rates stay below 5.4 percent.
“Even with multiple expected rate increases by the Fed this year, most forecasts suggest mortgage rates will remain below 5 percent. So based on these results, the purchase demand this spring should not be materially impacted by any modest increase in mortgage rates,” Fleming said.
The RESI found overall confidence in transaction volume, home purchases and prices nationwide. Levels of confidence among independent title agents and real estate professionals, however, varied greatly from state to state.
“On a regional level, title agents and real estate professionals in the Midwest were the most confident that first-time homebuyer demand will rise regardless of rate increases, Fleming said. “In contrast, the Northeast was the most pessimistic, with title agents and real estate professionals in New York, Vermont, Maine, Connecticut and New Jersey on average disagreeing that first-time homebuyer demand will rise regardless of rate increases.”