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Survey Respondents see Home Prices, Interest Rates, and Rents Leveling
Nornmatter how the results of Fannie Mae’s National Housing Survey for May arerninterpreted, it is hard to see them as good short terms news for the housingrnmarket. The company says that Americans’ concerns about the direction of the economy and theirrnhousehold income appear to be weighing on housing growth. It is also possible that the results meanrnthat potential homebuyers see several reasons to return to the wait and seernattitude that helped flatten the market in 2011 and 2012. </p
According to Fannie Mae,rnthe share of respondents who still believe the economy is headed in the wrongrndirection remained at 57 percent last month while the right track numbers rosernfrom 35 percent to 38 percent. </p
“Consumers’ lukewarm income expectations andrnreticence about the economy seem to be holding back housing demand,” said DougrnDuncan, senior vice president and chief economist at Fannie Mae. “This year’srnspring and summer home buying season has gotten off to a slow start, even asrnmortgage rates have trended lower over the past two months. Our NationalrnHousing Survey data show that economic conditions continue to be the toprnconcern among consumers who think it’s a bad time to buy or sell a home. Whilernrecent housing activity suggests that the worst of the housing slump may be behindrnus, this caution among consumers supports our expectation that the rebound inrnhome sales will likely be too modest to pull sales for all of 2014 ahead ofrnlast year.”</p
Or maybe potential homebuyers arernputting plans on hold because they think there might be more opportunities</bahead, most notably in the area of home values. rnPrices have risen rapidly since bottoming out in early 2012, and in somernareas such as California this, coupled with higher rates, has dramaticallyrnreduced affordability. In the May surveyrnthe share of respondents who say home prices will gornup in the next 12 months fell to 48 percent, and the share who say home pricesrnwill go down increased to 7 percent. Among those who expect prices torncontinue to increase the average increase held steady at 2.9 percent. </p
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Atrnthe same time the percentage of those who expect further increases in mortgagerninterest rates fell from 52 percent to 49 percent. The number looking for lower rates also wentrndown from 7 to 5 percent while those who expect that rates have stabilized wasrnunchanged at 38 percent for the third consecutive month. </p
Those who say it is a good time to buy a house fell slightly to 68rnpercent, and those who say it is a good time to sell a house increased to 43rnpercent, a new all-time survey high.</p
A slight majority of respondents expect rents to increase over thernnext year. Just over 50 percent havernexpressed that since at least last May but the number who expect rents torndecline rose this month from 43 to 39 percent. rnThe average 12-month rental price change expectation decreased slightlyrnto 3.9 percent.rn</p
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Forty-nine percent of respondents thought it would be easy forrnthem to get a home mortgage today, rising 4 percentage points from last month. The share who say they would buy if they were going to movernincreased slightly to 66 percent. </p
Thernpercentage of respondents who expect their personal financial situation to getrnbetter over the next 12 months fell slightly to 42 percent. The share of respondents who sayrntheir household income is significantly higher than it was 12 months agorndecreased 4 percentage points to 21 percent. rnAt the same time there did seem to be some improvement in householdrnfinances. The share of respondents whornsaid their household expenses had declined significantly rose 3 points whilernthe number who said expenses had risen fell 5 points. </p
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Thernmost detailed consumer attitudinal survey of its kind, the Fannie Mae NationalrnHousing Survey polled 1,000 Americans via live telephone interview to assessrntheir attitudes toward owning and renting a home, home and rental pricernchanges, homeownership distress, the economy, household finances, and overallrnconsumer confidence. Homeowners and renters are asked more than 100 questionsrnused to track attitudinal shifts from month to month dating back to the survey’srnorigination in June 2010.
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Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.
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