Southern Californians are a bit more confident than most about the future of their local housing market, according to a new survey out Thursday from real estate website Zillow. But they’re less likely than most to plan on buying a house.
The Seattle-based real estate website surveyed 10,000 people by phone in 20 metro areas nationwide about their perception of the housing market today, their expectations over the next two years and their aspirations for a new home.
It used the results to create a new index measuring confidence in local housing markets. Metro Los Angeles scored 64.4 out of 100, a bit above the national average of 63.7. San Jose led the pack at 69.4; St. Louis brought up the rear at 58.9.
“Generally people in L.A. are pretty confident about the housing market right now,” said Zillow’s chief economist Stan Humphries. “A lot of that, of course, is because L.A. has had a strong recovery.”
That confidence won’t necessarily translate into new sales, though. Just 6% of those surveyed in Los Angeles said they plan to buy a house within the next year, below the 8% national average and ahead of only New York, Minneapolis and St. Louis. Confidence was especially low among renters, Humphries said, who missed out on building equity during the recovery and now face higher prices, without higher incomes to match.
“In my opinion, L.A. is headed into some affordability issues,” he said. “Right now, people in the L.A. metro area are spending more of their income on their mortgage than they have been. And [rates are] still historically low. When they get back to 6%, it does not leave a lot of room for price appreciation.”
Rising prices are already putting a damper on sales. San Diego-based DataQuick reported Wednesday that home sales in February were down 12% year-over-year. Experts say this spring buying season will be a key test of whether the housing market can find more solid footing.