What Do Americans Think About the Current Housing Market?
Photo: © Steve Greer - iStockphoto
Home buyers and investors alike are trying to gauge the health of the real estate market. One of the best ways to predict sales figures is to ask Americans if they plan on buying. The Fannie Mae National Housing Survey of May 2012 reported on the attitudes of 1,002 polled Americans toward the real estate market and the economy. The answers reflect the current—and the future—state of the housing market.
Higher Home Prices
Seventy-two percent of survey respondents believed that the current real estate market was a good one to jump into, a one percent increase over the previous month. A much smaller 15 percent of respondents thought market conditions favored sellers. The reason—many respondents expected home prices to increase by an average of 1.4 percent, the highest value yet recorded in the National Housing Survey. This increase would incentivise many Americans to start their home searches before prices rise, while encouraging sellers to wait for a higher asking price. Another reason for the positive outlook is the belief of 41 percent of respondents that home mortgage rates will increase over the next year; buyers want to lock in their mortgages before rates increase.
Downturn in Personal Finances
Yet only 63 percent of those surveyed would buy in today's real estate market, down from 64 percent in April and 66 percent in March. This could be due to the answers respondents gave to questions about personal finances. Twelve percent of respondents expected to see a decline in their financial standing, while 46 percent expected their financial situation to stay the same over the next 12 months. Fifteen percent of those questioned stated their household income is lower than it was a year ago.
Positive Signs
While 32 percent of those surveyed said their expenses had increased significantly in the past year, that is the lowest value reported in the history of the survey and a four percent decrease from the month before. And a record-high 38 percent of respondents believed the economy was starting to improve.
Rising Rents
Survey respondents also foresaw an increase in rental prices. Forty-nine percent—the highest percentage recorded to date—believed rental prices would rise. On average, respondents expected rents to increase by 4.1 percent over the next year. It could be the rising rents, or it could be the dream of home ownership, but when respondents were asked what they would do if they were to move, only 32 percent would rent while 63 percent would buy.
Americans are approaching the American dream with a little more caution, keeping their finances and the future of the economy in mind—an approach that can only help the long-term stability of the housing market.
