Americans are still very pessimistic about the economy, home prices and household finances, according to results from Fannie Mae's September National Housing Survey.
"The September survey showed a marked deterioration in consumer expectations of home prices over the next year - their weakest outlook since monthly tracking began in June 2010," said Doug Duncan, vice president and chief economist of Fannie Mae. "Despite a decline in negative economic headlines during September, consumers continue to demonstrate very negative attitudes."
Findings of the study show a very large decline in expectation for higher mortgage rates in September, with only 33 percent expecting mortgage rates will go up in the next 12 months. For the fourth month in a row, Americans expect home prices to decline over the next year. On average, Americans expect home prices to go down by 1.1 percent, the highest expected decline to date. Only 18 percent of respondents expect home prices to increase over the next 12 months, while 25 percent say they expect home prices to decline, down by 2 percent since August. On average, Americans expect home rental prices to increase by 3.3 percent over the next year, down slightly from the expected increase of 3.5 percent observed in August.
Despite continued consumer caution about taking on a large financial obligation to buy a home, 68 percent of Americans say it is a good time to buy a home; 63 percent say they would buy their next home if they were going to move, while 32 percent of Americans say they would rent their next home.
"The survey shows Americans still believe in the American dream of home ownership, despite their pessimism," said Gene Lentz, president of the Silicon Valley Association of REALTORS®. "A strong housing recovery depends on consumer confidence, which can't improve unless we have job creation. With loan limits reduced, the availability and cost of home loans will also impact attitudes as we move forward."
Americans' attitude toward the economy and household finances is just as pessimistic. Majority (77 percent) say the economy is on the wrong track, while 16 percent – the same percentage as in August - think the economy is on the right track.
The number of Americans who expect their personal financial situation to worsen over the next year decreased for the first time in four months – 19 percent said they expect their financial situation to worsen compared with 22 percent in August. Forty-three percent of Americans report significantly higher expenses compared to one year ago. This number has increased for five consecutive months, while the majority of respondents say their household income has remained the same.
The Fannie Mae National Housing Survey polled 1,002 Americans via telephone interview to assess their attitudes toward owning and renting a home, mortgage rates, homeownership distress, the economy, household finances, and overall consumer confidence. The September 2011 Fannie Mae National Housing Survey was conducted between September 6, 2011 and September 25, 2011.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
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