A new survey from Zillow said the homeownership rate will climb above the historic norm within five years.

A survey of more than 100 real estate economists by Zillow and Pulsenomics, LLC, reported a majority (58 percent) said home values today were somewhat or much more sensitive to changing rates than in years past. Only 15 percent of panelists said home values today are somewhat or much less sensitive to interest rates. "Rising rates take a big chunk out of buying power," said Zillow Senior Economist Aaron Terrazas. "If rates grow to 5.5 percent, a typical U.S. household looking to spend no more than 30 percent of its income on housing would have to slash its home-buying budget by nearly $35,000 to keep the payment from rising. The result means buyers on strict budgets have a smaller share of potential homes to consider, and others might stretch their budgets dangerously thin." 

Despite that uncertainty, panelists largely expect first-time buyer activity to increase--and investor activity to decrease--this year, with the homeownership rate climbing above its long-term average in the next five years. Nearly half the panelists predicted first-time buyer activity would increase somewhat or substantially, with less than a quarter predicting a decrease. The rest said it would remain about the same. Repeat buyer activity, by comparison, was a prediction stalemate, with nearly half saying it would not change much, and an equal 23 percent on either side--predicting it would increase somewhat or decrease somewhat. 

Source: Zillow