Homebuyers’ pessimism about market conditions has reached a new low.
Just 21% of adults in the United States say it’s a good time to buy a home, according to a new Gallup poll, a record low since 1978 when the company began conducting its annual survey. It’s down nine percentage points from last year, the second time the number has fallen below 50%.
The latest findings are from Gallup’s annual Poll of Economics and Personal Finance, conducted April 3-25, and come at a time when rising mortgage rates, rising home prices and low inventory levels have slowed the housing market.
“Views about the housing market are bleak and generally similar across all major subgroups, including by area, urbanization, homeownership status, income, education, and party identification,” says Geoff Johns, editor at Gallup.
Gallup first asked Americans about their perceptions of the housing market in 1978, when 53% thought it was the right time to buy a home. Thirteen years later, when the question was asked again, 67% supported this view. A record high of 81% was set in 2003, at a time of increasing homeownership rates and home prices.
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Even at the height of the housing crisis, from 2006-2008, Americans were more optimistic about home purchases, with about 52% of people saying it was a good time to buy a home. The current sentiment is more than 30 percentage points lower than what people felt during the Great Recession.
Will home prices continue to increase?
In addition to gauging Americans’ perceptions of the housing market in general, Gallup monitors public expectations for home prices in their area. In 2021, 71% expected local home prices to rise over the next year, the highest percentage that held that view in a Gallup trend dating back to 2005. Last year, a similar 70% expected home prices to rise.
Currently, 56% hold this view, while 25% believe that prices will remain the same and 19% believe they will decrease.
Despite the declines this year, current projections for home prices are still relatively high. In 2020, 40% thought home prices would rise, and from 2009 through 2012, after the housing bubble burst, it increased between 22% and 34%.
Forecasts of home price increases vary from region to region
Regionally, Midwestern residents are less likely than those in other parts of the country to predict that home prices in their area will rise over the next year. While 45% of residents of the Midwest expect prices to rise, 55% of residents of the West, 61% of residents of the South, and 62% of residents of the East expect them to rise.
Also, those who live in cities or rural areas (45%) are much less inclined than residents of cities (64%) or suburbs (57%) to predict increases in local housing prices.
Midwest, Western, and city/country residents show the largest declines since 2022 in the percentage of believing local home values will increase, each decreasing by 21 points or more. The southern, city and suburban populations showed a slight decrease, while there was no change among the eastern populations.
Real estate is still considered the best long term investment
More Americans continue to name real estate rather than stocks, gold, savings accounts/CDs, or bonds when asked about the best long-term investment.
34% of Americans chose real estate this year, but it fell sharply from last year’s record high of 45%. However, at 34%, it’s on par with the typical percentage for choosing real estate from 2016 to 2020, before home prices soared during the pandemic.
Meanwhile, the perception that gold is the best has nearly doubled, rising from 15% in 2022 to 26% today. As a result, gold overtook stocks in second place.
Although 19% of Americans expect home prices to fall in the next year—much less than the 38% and 34% who did in 2008 and 2009, respectively—they are much less likely than they have been in the past two years to anticipate prices. Go up. Any stabilizing or downward pressure on home prices could make homes more affordable for Americans, especially if interest rates stabilize or fall in the coming years.
Swapna Venugopal Ramaswamy is USA TODAY’s housing and economics correspondent. You can follow her on Twitter @employee Subscribe to our Daily Money newsletter here.
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