Homeowners remain optimistic about industry, but are concerned about interest rates

Rising interest rates are the most recent concern for current and prospective homebuyers, but they both remain optimistic about the real estate industry.

According to Berkshire Hathaway HomeServices’ latest Homeowner Sentiment Survey, more than three-quarters of current homeowners, an increase of 16 percentage points from last year, and 79 percent of prospective homeowners, an increase of 8 percentage points from last year, said that increasing interest rates are currently a challenge in the real estate industry. Forty-four percent of current homeowners, and 70 percent of prospective homeowners reported they would feel anxious if mortgage rates rose, an increase from last year for both.

However, two-thirds of current homeowners and 63 percent of prospective homeowners have favorable opinions of the U.S. real estate market, which has been consistent throughout the year. The most optimistic generation is millennials, in which 74 percent found the housing market favorable. Additionally, millennials are also the most satisfied with the U.S. economy (62 percent), compared to Generation X (52 percent) and baby boomers (38 percent).

“People feel good about real estate because housing is doing well in many markets across America,” said Gino Blefari, CEO of Berkshire Hathaway HomeServices in the press release. “Although the idea of a rate hike can grab headlines and initially create some unease, it’s important to remember rate increases are often the mark of an improving, healthy U.S. economy. That is the case today.”

Most respondents were feeling optimistic about the real estate industry thanks to lower interest rates, increased value of real estate and a larger variety of homes on the market.

Prospective homeowners are feeling more knowledgeable about mortgage rates over the past year, increasing from 52 percent to 61 percent of respondents, while current homeowners have remained around the same, at 63 percent. Prospective homeowners generally think that the mortgage rates are average, while current homeowners think they are low.

Among millennials, 59 percent said they would rather purchase a starter home as a “step” toward purchasing their dream home, while 41 percent prefer to save and become a homeowner when they can afford their dream dwelling.

Overall, even with technology advancing rapidly, both current and prospective homeowners believe real estate agents and brokers are still important. And the majority of respondents said they are most excited about virtual reality home tours.