More Households Optimistic About Home Prices, Finances
Daily Real Estate News, Thursday August 29, 2014
The majority of households believe home prices will rise within the next 12 months, according to the Federal Reserve’s newly released Report on the Economic Well-Being of U.S. Households. The survey is based on more than 4,000 American responses from 2013 about their household finances, including housing.
“The outlook for the housing market among home owners appeared generally positive, as many home owners expected house prices in their neighborhoods to increase,” the report notes.
Twenty-six percent of home owner respondents say they expect an increase in their home value by 5 percent or less, and 14 percent expect an increase in values of greater than 5 percent. Less than 10 percent of home owners expect home prices in their neighborhoods to decline over the 12 months, according to the survey.
Many home owners are still banking on home prices. After all, 46 percent of households believe the value of their home is lower than the value in 2008, according to the report. On the other hand, 27 percent of households felt their home’s value is higher than in 2008; 20 percent say their home’s value is likely about the same; and 7 percent say they weren’t sure.
Overall, the survey found that while many households are faring well financially, a great deal are still showing signs of financial stress. More than 60 percent of respondents said that their families were either “doing OK” or “living comfortably” financially, while one-fourth of respondents said they were “just getting by” financially and 13 percent said they were struggling. The Great Recession is still being felt by many: 34 percent reported they were somewhat worse off or much worse off financially than they had been five years earlier in 2008.
Many renters expressed an interest in home ownership, but said they are facing several barriers, such as saving for a down payment and the inability to qualify for a mortgage.
For example, 49 percent of renters in the 18-to-29 age group say the biggest reason why they rent rather than own a home is because they cannot afford the down payment; it was the age group that was most likely to report down payment woes. Meanwhile, 45 to 59 year old renters were the largest share of renters to say they could not qualify for a mortgage and that’s why they are renting.
Source: Federal Reserve