April 12th, 2012
Econintersect: A variety of sources are joining the battle cry urging individuals to buy a home. Among these are Addison Wiggin at The Daily Reckoning, housing information source CoreLogic, Fannie Mae and the NAR (National Association of Realtors). The Fannie Mae housing survey for March has found that 73% of Americans say now is a good time to buy. Factors that produce this sentiment include expectations that mortgage rates will rise and projections that home prices are headed higher. While this may be true in some markets there are other markets which likely have not reached bottom.
Here are two graphs from The Daily Reckoning that show the extent that buying has become cheaper than renting compared to recent decades:
Editor's note: Econintersect believes the value being plotted is the ratio of median home price to median percapita disposable income (not a percentage as stated).
But as cheap as buying is vs. renting, millions have been locked out of the home buying market by credit impairment from foreclosures and millions more are locked out by un- and under-employment (GEI News). And it is not going to get better soon as the foreclosure process has run only 1/3 of its likely eventual total.
Here is the entire press release from Fannie Mae:
Americans' Expectations Align to Encourage Home Buying
Respondents Expect Significant Rental Price Rise
WASHINGTON, DC – More consumers may be looking to purchase homes with a shift in several key housing market indicators, according to Fannie Mae’s March 2012 consumer attitudinal National Housing Survey. More Americans now expect both home rental and home purchase prices to increase over the next year. Nearly half of consumers expect higher rental prices, the highest number recorded since monthly tracking began in June 2010. Thirty-three percent expect home prices to increase, up 5 percentage points since last month, and the highest percentage recorded in over a year. In addition, confidence in consumers’ views of their own finances is stabilizing—for three straight months—44 percent believe their personal finances will get better over the next year. These trends may be providing Americans with an increased sense of urgency to buy a home as 73 percent of Americans now believe it is a good time to buy a home, up from seventy percent in February.
“Conditions are coming together to encourage people to want to buy homes,” said Doug Duncan, vice president and chief economist of Fannie Mae. “Americans’ rental price expectations for the next year continue to rise, reaching their record high level for our survey this month. With an increasing share of consumers expecting higher mortgage rates and home prices over the next 12 months, some may feel that renting is becoming more costly and that homeownership is a more compelling housing choice.”
Homeownership and Renting
- Thirty-three percent of respondents expect home prices to increase over the next 12 months, a five percentage point increase from last month, the highest level over the past 12 months.
- On average, Americans expect home prices to increase by 0.9 percent over the next 12 months (up slightly since last month).
- Thirty-nine percent of Americans say that mortgage rates will go up in the next 12 months, a five percentage point increase from last month.
- The percentage of respondents who say it is a good time to buy rose by three points to 73 percent, the highest level in over a year, while the percentage of respondents who say it is a good time to sell rose one point to 14 percent this month.
- On average, respondents expect home rental prices to increase by 4.1 percent over the next 12 months, a significant increase since February, and the highest number recorded to date.
- Forty-eight percent of respondents think that home rental prices will go up, a three percentage point increase from last month and the highest number recorded to date.
- Sixty-six percent of respondents say they would buy their next home if they were going to move, up one point since last month, while thirty percent say they would rent, up one point versus last month.
The Economy and Household Finances
- The rise in confidence in the economy’s direction leveled this month, with 35 percent responding that they think the economy is on the right track, consistent with February’s total. The percentage who say the economy is on the wrong track rose slightly from 57 percent to 58 percent.
- Only 12 percent think that their personal financial situation will worsen in the next 12 months, consistent with February as the lowest value in over a year, and tied with January 2011 for the lowest to date.
- Twenty-one percent of respondents say their income is significantly higher than it was 12 months ago, up 1 point versus February, while 63 percent say it has stayed the same - consistent with February’s values
Thirty-four percent say their expenses have increased significantly over the past 12 months (a slight increase of one percentage point).
The most detailed consumer attitudinal survey of its kind, the Fannie Mae National Housing Survey polled 1,003 Americans via live telephone interview to assess their attitudes toward owning and renting a home, mortgage rates, homeownership distress, the economy, household finances, and overall consumer confidence. Homeowners and renters are asked more than 100 questions used to track attitudinal shifts (findings are compared to the same survey conducted monthly beginning June 2010). Fannie Mae conducts this survey and shares monthly and quarterly results so that we may help industry partners and market participants target our collective efforts to stabilize the housing market in the near-term, and provide support in the future.
For detailed findings from the March 2012 survey, as well as technical notes on survey methodology and the questions asked of respondents associated with each monthly indicator, please visit the Fannie Mae Monthly National Housing Survey site. Also available on the site are quarterly survey results, which provide a detailed assessment of combined data results from three monthly studies. The Fannie Mae National Housing Survey was conducted between March 1, 2012 and March 28, 2012. Interviews were conducted by Penn Schoen Berland, in coordination with Fannie Mae.
- Warm Winters and Slow Springs – Now Really is a Good Time to Buy (Mark Fleming, CoreLogic, April 2012)
- Buy a House! (Addison Wiggin, The Daily Reckoning, 6 April 2012)
- Buyer Urgency Improves, More See Now Good Time to Buy (Realtor Mag, 11 April 2012)
- March 2012 Data Release (Fannie Mae Survey)
- American’s Expectations Align to Encourage Home Buying (Fannie Mae News Release, 9 April 2012)
- 7 Reasons Why Now’s a Good Time to Buy a Home/ (Carla Fried, CBS News, 9 June 2011)
- 9 Reason To Buy A Home Now (Investopedia, Forbes, 3 June 2011)
- Home Purchase Cheaper than Rental in Many Cities – But So What? (GEI News, 25 March 2012)
- Housing: Slight Improvement in Improving Markets List (GEI News, 7 April 2012)
- Foreclosure Problem Still Has 2/3 to Go (John Lounsbury, GEI Analysis, 12 February 2012)