NEW YORK (MainStreet) One in ten renters in America wants to buy a home within the next 12 months. And most of these prospective homeowners say they are confident or somewhat confident they can afford to buy now. If they get their wish, it would more than double the number of first-time homeowners who made the move in 2013. That makes for strong, pent-up demand, but challenges to the housing market remain, including rising rates and tight inventory.
As the winter melt begins and the spring house-hunting season begins, the markets with the highest concentration of renters aspiring to be homeowners include Miami, Atlanta and Las Vegas, according to research by Zillow. Of course, these are three cities that were slammed hard by the housing downturn and are working their way through recovery.
However, it may be difficult for these potential buyers to find their perfect picket fence. Inventory is up slightly across the nation but still well below optimal levels and single-family new construction is weak.
Meanwhile, mortgage interest rates are starting to creep up, now nearly 1% higher from last year's lows, making homes in hot markets such as San Francisco, Los Angeles, San Jose and San Diego increasingly hard to afford.
"For the housing market to continue its recovery, it is critical that homes are both available and remain affordable to meet the strong demand these survey results are predicting, particularly from first-time homebuyers," says Zillow chief economist Stan Humphries. "Even after a wrenching housing recession, this data shows that the dream of homeownership remains very much alive and well, even in those areas that were hardest hit. But these aspirations must also contend with the current reality, and in many areas, conditions remain difficult for buyers. The market is moving toward more balance between buyers and sellers, but it is a slow and uneven process."
Considering all households, not just renters, indicating they plan to buy a home within the next year, these metro areas indicate the strongest demand: Miami, Phoenix, Las Vegas, Dallas, Detroit, Tampa, Seattle, Denver and San Diego.
--Written by Hal M. Bundrick for MainStreet