I remember it like it was yesterday. A hot — really hot — summer day in Chicago. The sun was sweltering but the water in the pool below was cool, blue, glistening and inviting. The problem for me at that moment was the distance between me on that high dive and the watery relief down there. Despite the urging of my godfather and his family — all in Greek of course — I was frozen. Petrified. I was afraid to take the plunge despite how much I loved the water, the cool relief that was tempting for me, and the support of my family. Eventually, I jumped. And it was great.

I spent a lot of hot days at public pools when I visited Chicago and elsewhere since then, but I never forgot the courage, and confidence, that came with that first leap. Confidence is important, but only in the right perspective. Mark Twain once said, “All you need in life is ignorance and confidence, and then success is sure.” Okay, confidence is bad when paired with ignorance, but confidence is also a prerequisite for economic markets to work — and that’s especially true for the real estate market. 

As the spring real estate market begins to blossom, there are signs that the confidence of buyers and sellers, which has grown significantly since the Great Recession, may bring us a prosperous market in 2019 and beyond. 

A pair of studies recently released by the National Association of REALTORS^® (NAR) provided some insights into today’s and tomorrow’s market.

NAR’s Confidence Index Survey in January revealed some interesting details of today’s market conditions, including: 

• 78 percent reported home prices remained constant or rose in January 2019 compared to January 2018. 
• First-time homebuyers accounted for 29 percent of sales, about the same as last January.
• Cash sales constituted 23 percent of sales. 
• Nationally, homes were on the market 49 days. Wisconsin fared better with between 31-45 days. 
• 49 percent of respondents said prices are higher than a year ago, 22 percent said lower, and 29 percent said unchanged. 
• Most states expected to see prices go up between 0 to 2 percent. Wisconsin was one of just 10 or so states that predicted prices rising 2 to 3 percent. Only a few states predicted a 3- to 4-percent price increase. 
• Key characteristics of today’s buyers included: 
  • Twenty-six percent were over 56 years old, 45 percent were 35-55 years old, and 29 percent were 34 or younger. 
  • The number one problem for contracts with delayed closings was issues relating to financing — 35 percent, followed by home inspections or other environmental issues — 16 percent, appraisal issues — 14 percent, titling/deed issues —10 percent, and contingencies in the contract — 10 percent. Twenty-three percent of respondents said “other” issues. 
  • Contingencies on properties included home inspections — 55 percent, appraisals — 44 percent, obtaining financing — 45 percent, having clear title — 12 percent, and selling current home — 7 percent.

Most respondents predicted market conditions to improve in 2019, particularly for detached single-family homes. 

So who will be buying those homes next year and beyond? This was the subject of a second report NAR released in January, which profiled aspiring homebuyers.

Of all U.S. consumer households surveyed, 64 percent were homeowners, 27 percent were renters and 9 percent lived with someone else. Generally, non-homeowners were younger with less income — 45 percent were 34 years old or younger, and 59 percent make incomes under $50,000. Conversely, homeowners were older with more income — 53 percent were over 55 years old, and 73 percent of them had incomes over $50,000; specifically, 35 percent made between $50,000-100,000, and 38 percent made over $100,000.

Another distinction between owners and non-owners was their perception of whether it was a good time to buy a home. While 72 percent of owners generally thought the market presented a good time to buy, only 47 percent of non-owners thought the same. But non-owners differed on this question by age: 63 percent of older non-owners, ages 55-64, thought it was a good time to buy a home; while that number dropped to 52 percent of younger non-owners, ages 34 and younger.

The best news that united owners and non-owners was the shared perception that homeownership is strongly considered part of the American Dream. Seventy-five percent of non-owners and 90 percent of owners felt that way. The main reason non-owners said they didn’t own wasn’t about lifestyle choices; it was because they couldn’t afford a home, with 43 percent providing this response. When asked what would move them to homeownership, 28-31 percent of non-owners said an improvement in their financial situation, followed by 26-30 percent indicating a change in their lifestyle such as getting married, starting a family or retiring.

The bottom line is Americans still want to own a home, despite numerous recent reports to the contrary. Homeownership rates have gone up from a low of 63 percent in mid-2006 to 64.6 percent at the end of 2018. This means homeownership rates have regained all the ground lost since 2014 — more a function of demographic realities than shifting societal predilections. But prices also played a role. In mid-2015, rents began rising, and rising fast — up more than 6 percent from a year earlier. Those rent increases motivated many buyers into the “pool,” so to speak. Potential buyers also wanted the asset of owning a property since home values were increasing much faster than inflation, and they feared the end of low interest rates, as the Federal Reserve began signaling that increases were coming.

This research shows that our market fundamentals, as well as consumer attitudes and aspirations, remain strong. Hopefully that gives buyers and sellers the confidence to get into the market in 2019. Our message to them: Jump in, the water’s fine!