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53 » VISIT US ONLINE @ DSNEWS.COM TROUBLE ON THE HORIZON? When it comes to Americans' optimism about buying homes, Q2's numbers might as well be cribbed from the National Association of Realtors' (NAR) Q1 report. NAR's second- quarter Housing Opportunities and Market Experience (HOME) Survey found that 68 percent of people think it's a good time to buy—statistically, pretty much the same as in the first quarter. at optimism has remained steady among homeowners in particular. As with last quarter, 39 percent strongly agree now is a good time to buy, while 29 percent moderately agree. Among renters, however, those positive feelings dropped from 55 to 49 percent in Q2. Optimism is highest among older buyers (65 or over) and those living in the South and Midwest regions (73 and 71 percent, respectively). NAR Chief Economist Lawrence Yun said affordability and low inventory are eroding buyer confidence. "Inventory remains the driving force in real estate, affecting everything from rising prices to household formation. Improving supply conditions is critical to improving buyer optimism and helping to remove some of the barriers holding back potential first-time buyers," Yun said. Sixty-eight percent of those surveyed said they believe home prices have gone up in their area within the last 12 months. at's up from 63 percent last quarter. Meanwhile, 55 percent also believe home prices will keep going up in their communities through year's end. at's about where it was last quarter, too. ose numbers also largely mirror optimism about the economy in general. According to the report, almost 60 percent said the economy will stay strong. Most of the optimists are in rural areas, where 63 percent said the economy is improving. e largest change in perception from Q1 regarded mortgages. Forty-six percent of those surveyed said they do not believe it would be difficult to obtain a mortgage. While still less than half, that number is up from 36 percent last quarter. "is is most likely a reflection of the current positive outlook on the direction of the economy," Yun said. "Healthy job creation and faster wage growth mean that homeownership is viewed as a more attainable goal than it was a year ago." But optimism for several years ahead was a little less bouncy. Asked if homeownership will be easier or harder to attain for future generations, 73 percent said it will be harder for future generations to purchase a home, compared to 11 percent who said it will be easier. On the other side of the table, 75 percent believe that now is a good time to sell. Twenty- nine percent overall said now is not a good time to sell a home. Among homeowners, that number was 19 percent. "Hopefully, this strong seller optimism will lead to an increase in inventory later on in the year," Yun said. HOUSING MARKET HEALTH Deteriorating housing affordability and below average household growth are likely to impede the sustainable growth of the housing market, according to Nationwide's Leading Index of Healthy Housing Markets (LIHHM) for the first quarter of 2018. e index fell to its lowest level since the housing bust, according to Nationwide, and as of Q2 2018, the national LIHHM is reported to be "neutral," while the majority of metropolitan statistical areas (MSAs) are reported to be healthy. is is the first time since 2004 that the national LIHHM fell to neutral. Another temporary headwind in Q1 noted by the study was the spike in delinquency rates in Texas and Florida, due in part to damage and displaced families following the hurricanes in 2017. "ese rates are not indicative of a national problem and could mean a higher score in future quarters as these areas recover," the study noted. e majority of metro areas are still healthy, despite rising prices nationwide. A solid job market remains the driving factor in positive LIHHM scores, while these high prices are holding it back. Around 40 percent of metro areas saw little to no change in LIHHM over the past year, while the areas that saw the highest increase were driven mostly by solid job markets and job growth. Declining affordability was the leading cause of declining LIHHM ranking. Lack of inventory has lifted prices to a "concerning level" according to Nationwide, even as home price appreciation in over 75 percent of MSAs was recorded above the local long-term average over the past year. After several years of rapid price gains, the study found that single-family housing had become increasingly unaffordable in many metros, worsening the outlook for housing sustainability in those areas. Many cities saw decreased affordability in the past year, notably along the West Coast. In California, San Jose, San Francisco, and Oakland sit at the bottom of Nationwide's national ranking of metro areas with the steepest declines in affordability.

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