CHICAGO, IL--(Marketwired - Jun 19, 2014) -
- Survey of Illinois residents finds 76 percent of those aged 18-34 will buy in next 5 years
- Those in Illinois, and especially Chicago, more likely than national average to own a condo versus a house
- BMO Economics: student debt causing some pause with young homeownerships
According to the BMO Harris Bank Housing Confidence Report issued today, half of Illinois residents (53 percent) plan to purchase a home in the next five years, indicating that confidence in the housing market is high. In Chicago, that number rises to 61 percent. In Illinois, 14 percent of those with a five-year timeline will be first-time homebuyers.
The study showed likelihood to buy is highest among millennials in Illinois, and increases with a longer purchasing timeline:
|Timeline for Purchase||Ages 18-34||Ages 35-54||Ages 55+||Total Likely|
|Next 12 months||29%||24%||7%||20%|
|Next 2 Years||41%||33%||19%||31%|
|Next 5 Years||76%||50%||32%||53%|
"We had a strong start to the home buying season, and that momentum has carried through for a few months now," said Joe Tunk, Director of Mortgage Sales, Illinois, BMO Harris Bank. "We see this confidence and propensity for activity reflected in the survey numbers, which show that the next few years look like they will be busy for potential homebuyers. For those looking at a nearer-term purchase, we encourage them to get pre-approved to make the purchase experience that much smoother."
According to the study, three-quarters of Illinois residents currently own and one quarter rent. The top three reasons homeowners cited for owning rather than renting were somewhere to call t heir own (66 percent), long-term investment (64 percent) and more stability and certainty (62 percent). The top three reasons people in Illinois cited for renting rather than owning were financial instability (57 percent), more flexibility and freedom (30 percent) and having to deal with less upkeep and maintenance (28 percent).
"While the housing market is on the upswing, the record level of student debt carried by young Americans does pose a challenge to many in their 20s and 30s hoping to purchase their first home," said Michael Gregory, Head of U.S. Economics, BMO Capital Markets. "Student debt levels have more than doubled in the last seven years to $1.1 trillion. The financial burden means renters are delaying entering the purchasing market, which has a trickle-down effect on the overall housing recovery."
According to BMO Economics, U.S. home prices are still rising. The S&P/Case-Shiller metric is up 12.4 percent year-over-year during the past 12 months (ending March) and 12.8 percent in the first quarter of 2014. Although the annual pace is slightly slower than the post-recession 13.7 percent year-over-year peak hit last autumn (and a cooling is welcome at this point given affordability considerations), prices are still up a cumulative 25 percent from their January 2012 lows.
The study also showed ownership by property type:
At the national level, the poll found:
- Three-quarters (74 percent) of American millennials will buy in the next 5 years
- Nearly half (45 percent) of millennials said they will buy in the next two years, and a third (32 percent) will buy in the next 12 months
- Just more than a tenth (12 percent) of renters say they prefer to rent and never plan to buy
Survey results cited in this report are from a Pollara survey commissioned by BMO Harris Bank using interviews with an online sample of 2,500 Americans, including 250 from the state of Illinois, conducted between April 1st and 7th, 2014. The margin of error for a probability sample of 2,500 is ± 1.96%, and 250 is ± 6.2% 19 times out of 20.
For more trends, tips and tools for your financial future, visit bmoharris.com/YourFinancialLife.
About BMO Harris Bank
BMO Harris Bank provides a broad range of personal banking products and solutions through more than 600 branches and approximately 1,300 ATMs in Illinois, Wisconsin, Indiana, Kansas, Missouri, Minnesota, Arizona and Florida. BMO Harris Bank's commercial banking team provides a combination of sector expertise, local knowledge and mid-market focus throughout the U.S. For more information about BMO Harris Bank, go to the company fact sheet. Banking products and services are provided by BMO Harris Bank N.A. and are subject to bank or credit approval. BMO Harris® and BMO Harris Bank® are trade names used by BMO Harris Bank N.A. Member FDIC. BMO Harris Bank is part of BMO Financial Group, a North American financial organization with approximately 1,600 branches, and CDN $582 billion in assets (as of April 30, 2014).