Housing market forecast grim, survey reveals
With the sluggish economy, high unemployment rate and overall malaise about the general state of affairs here at home, it's no surprise those on Main Street still view a boost in the housing market as key to an economic turnaround.
It's not just current homeowners looking to sell that are concerned with the long market times and low sale prices; potential buyers are turned off by fears of falling mortgage rates after they've locked in and home values plummeting even further.
According to a recent survey conducted by Move.com, nearly 70 percent of Americans' votes in the 2012 election will be determined by a candidate's position on housing. This data gives raw numbers to what most of us already know: Nearly all Americans (more than 87 percent, in fact) view a housing recovery as a critical factor in the nation's overall economic recovery.
That said, most Main Streeters don't see a housing boom happening anytime soon. Nearly three-quarters of Americans believe the condition of the housing market will be the same or worse one year from now, while under a quarter believe we'll see any improvement in conditions within the same time period.
A deeper look into the data suggests the majority of Americans might be right to be pessimistic about a housing recovery. According to the results of the survey, 27 percent of Americans plan to buy a home in the future. While that sounds like a lot, it's not great news -- only two percent of those people plan to buy in the next 12 months.
What's holding these buyers back?
The survey reveals four key factors:
Trouble saving for a down payment. The high unemployment rate means many people are without jobs, and many of those who are working are underemployed. Even those with steady incomes and good jobs might have trouble making ends meet -- basic necessities are getting more expensive every year. A whopping 55 percent of those planning to buy a home in the next few years are putting it off because they don't have the money for down payments or closing costs.
Uncertainty about future prices. Fifty-three percent of Americans planning to buy a home in the future are putting it off because they're waiting for prices to stabilize. This makes sense, but with an ever-increasing supply and no increase in demand, it's unlikely that prices will stabilize soon. If you combine these issues with mortgage rates that continue to decrease it's no wonder Main Streeters are anxious.
Concern about the economy as a whole. More than 50 percent of Americans are really worried about the economy and what another recession might mean for their wallets and bank accounts. They're scared of losing their jobs or the country going into a double-dip recession, and this anxiety has been heightened with every headline from the recent turmoil overseas. The thought of buying now only to lose even more in equity in the future due to a downturn, is enough to keep many people from taking the plunge into homeownership.
Inability to get financing. One of the many lessons learned from the housing bubble burst is that home buyers should not be able to get loans they can't afford. While it's good the banks are being careful about who they're lending to, it's bad that they've gone so conservative with lending standards. Many would-be buyers with decent credit and stable jobs are unable to get financing simply because banks aren't lending. It's tough to take advantage of low mortgage interest rates when you can't find someone to give you a loan.
It's good to know the dream of homeownership is still alive and well, but it's hard to be optimistic when there are so many factors keeping people from buying homes. If the majority of Americans are right and the housing market gets worse or stays the same over the next year, the overall economic recovery is much further away than most people would like.
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