As the real estate market shifts around us, timely data and actionable insights will help participants navigate the turbulence. As an embedded mortgage platform for investment real estate, Vontive tackles these challenges every day with our retail lending and capital partners. To help guide ourselves and our partners in managing strategy, execution, and risk, we are building a world-class data science regime.
We are pleased to release our inaugural U.S. Housing and Economy survey. This is the first public survey of its kind, comparing the views of real estate investors to those of consumer households. Vontive’s data shines a light on how these actively engaged audiences view the market. We are sharing our investment in quality data and original, authoritative research because real estate investors, homeowners, lenders, and financial institutions deserve access to such information to drive their decisions.
While pessimistic, expectations are not severe. For example, at the median, real estate investors of all experience levels expect house prices will decline 7% in 12 months. And they believe rents will appreciate 3%. The beliefs captured by our survey portray a more modest “housing reset” than the 2008 U.S. Housing Crisis.
While the survey does not provide clear cut answers about the housing market or roadmap for real estate investors, it does reinforce our belief in financing investments that add value to properties and create affordable housing, especially for renters. If prices modestly fall and rents appreciate, real estate investors who acquire and improve those assets will profit.
Key Findings on the Real Estate Market include:
- Real estate investors believe home values have transitioned from appreciation to decline, and the housing market will weaken over the next 12 months. In contrast, a majority of households believe the housing market is neutral or strong today and will remain there in 12 months.
- Real estate investors expect home values will decline 7% over the next year. While pessimistic, their expectations are not nearly as severe as the 2008 U.S. Housing Crisis when home values contracted approximately 30%. Consumers believe home values will appreciate 8% over the next year.
- Both real estate investors and consumers believe rents will appreciate over the next year (3% according to real estate investors and 8% according to consumers). Whereas consumers believe rents will continue a trend of appreciating, real estate investors expect rents will stabilize over the next year.
- Real estate investors believe the current market is the worst for buying an investment property, and good conditions will improve in 12 months. Likewise, households believe now is a bad time to buy a home, and conditions will improve in a year.
- In terms of securing a mortgage, real estate investors see it as more difficult, particularly as credit tightens over the next year. Consumers don’t see much of a change, but they are unsure of how easy or difficult it may be to secure a mortgage.
Key Findings on the Broader Economy include:
- Real estate investors and consumers are pessimistic about the economy. Both believe the economy is in a recession today, and a transition back is not expected until two years from today. Interestingly, 53% of consumers believe the economy was in a recession 12 months ago.
- In terms of inflation, both real estate investors and households believe it is accelerating. On average, real estate investors and consumers believe the inflation rate will be 7.39% and 9.35% in one year, respectively. To the right of the median, consumers expect inflation will be much higher in a year.
- Real estate investors believe the unemployment rate will be 5.61% a year from now. Consumers believe the unemployment rate will be 5.74%, modestly more pessimistic on average. At the 90th percentile, reflecting the most pessimistic view of our survey panels, real-estate investors believe unemployment will rise to 8% and consumers to 10%.
The timing of the initial survey, which was conducted September 18-24, 2022, overlapped with the Federal Reserve announcement of a 75-basis point interest rate hike. Due to timing and large sample size (1,052 real estate investors and 1,151 consumer households), we have been able to measure how a crucial monetary policy change may have influenced each panel’s responses.
This survey is a product of our research to monitor the health of the U.S. housing market and outlook for the economy. Each panel received the same questions to enable their views to be compared. The real-estate investor panel provides very significant coverage of non-institutional real estate investors. The consumer panel is nationally representative of households with a ±4% margin of error.