It's a buyer's market, but home sales continue to suffer as potential home buyers wait for prices to bottom out. Image: CC TheTruthAbout/Flickr
The housing market has been suffering as home sales and home values continue to slide. People aren’t buying houses, but perhaps they would if they could. A recent poll shows that most Americans believe now is a good time to buy a home.
Believing in a buyer’s market
A lagging housing market has been a drag on economic recovery, but a recent Gallup poll found that when it comes to home buying, 67 percent of Americans believe that now is a good time. Even though that is a majority of poll respondents, it isn’t exactly good news. The poll, taken earlier this month, involved a random sample of 1,018 adults. A Gallup poll a year ago found that 72 percent of respondents believed in a buyer’s market, up from 71 percent in 2009. The percentage of optimistic potential home buyers has dropped to 67 percent as home values keep declining. Potential home buyers are waiting for home prices to bottom out.
The great decline in home prices
The drop in U.S. home prices began in 2007, has persisted and will continue in 2011. RealtyTrac, a housing market research firm, reported a record number of foreclosures in 2010. Most of these homes haven’t yet been marketed. When they do, inventory of homes for sale will rise. A report from Standard & Poor’s said the average price of homes in the U.S. could fall by another 7 percent to 10 percent this year. Twenty-seven percent of respondents to the Gallup poll believe home prices in their neighborhoods will continue to plummet. Even more, 42 percent, are worried that their own homes will continue to lose value. Surprisingly, 21 percent expect home values to increase in their community.
Housing market outlook
To resuscitate the housing market, the government pulled out all the stops last year. The new home buyer tax credit gave $8,000 for each mortgage. The Federal Reserve bought more than $1 trillion in mortgage securities and has kept mortgage rates artificially low. But with unemployment still high, most American’s believe the recession hasn’t really ended. Fed chairman Ben Bernanke said last week that it could take at least three more years for employment to recover to pre-recession levels. But interest rates are so low, getting a loan to buy a house now is one of the best long-term investments available. Most American’s seem to believe that, but acting on it has yet to happen.
