The Housing Chronicles Blog: 60% of those polled not looking for a home but still say a good time to buy

Monday, April 14, 2008

60% of those polled not looking for a home but still say a good time to buy

According to a poll commissioned by the AP & AOL Money & Finance, 60% of people polled said they won't be buying a new home within the next 2 years. A similar amount, however, declared that now is a good time to buy. More from this story at CNNMoney:

A growing majority say they won't buy a home anytime soon, the latest sign of increasing pessimism about the nation's housing crisis, a poll showed Monday.

In a vivid sketch of how the sputtering real estate market is causing distress throughout the country, the Associated Press-AOL Money & Finance poll found that more than a quarter of homeowners worry their home will lose value over the next two years.

Fully one in seven mortgage holders fear they won't be able to make their monthly payments on time over the next six months...

Sixty percent said they definitely won't buy a home in the next two years, up from 53% who said so in an AP-AOL poll in September 2006. At the same time, just 11% are certain or very likely to buy soon, down from 15% two years ago.

The growing reluctance to dip into the housing market seems to stem partly from worry that housing prices will continue falling -- good if you're buying a house but bad if you have to sell one...

The number envisioning falling prices in their area has grown to one in four, while four in 10 think prices will rise, a decrease from two years ago. Expectations for rising prices are highest in the South, with Westerners likeliest to predict they will drop.

Underscoring the public's unsettled feelings, the number saying local housing prices are about right has fallen to 35%. Half say homes are overpriced - especially in the Northeast - while those saying housing is underpriced have doubled to one in 10, particularly Midwesterners...

One in 10 have adjustable rate mortgages, half of the number who said so two years ago. These mortgages generally start at a low interest rate and are later adjusted to market conditions - which has often meant steep, unaffordable boosts that have forced many to refinance or even lose their homes...

The public anxiety is in reaction to an economy that is veering toward recession and losing jobs even as the housing market sputters badly. Foreclosures have soared to record highs, mortgage rates have increased, sales of existing and new homes have fallen and home values have dropped.

Gus Faucher, director of macroeconomics for Moody's, a consulting firm, estimated that 9 million homeowners owe more on their home than it's worth. He said his company believes home sales are at or near bottom and home values will continue to fall until early next year.

Even so, he said, many people bought their homes before the run-up in values that started around 2001 and remain in good shape...

--The biggest worriers are those expecting to buy soon. Of that group 43% frets that their home's value will drop in the next two years, compared with 25% of those not expecting to buy shortly.

--59% think now is a good time to buy.

--Half think this is a very tough time for first-time buyers, an increase from two years ago.

--Nearly two-thirds think it's harder for first-home buyers than it was five years ago.

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