Year End Wrap Up: Optimism Reigns After Topsy-Turvy Year
The enigmatic year of 2014 began with a bang and is ending with a breather. The lull in price and volume promises to be short-lived as consumer optimism toward the housing market is growing.
More people are now saying it’s a good time to buy or sell a home, according to Fannie Mae’s 2014 National Housing Survey. The share of consumers who say now is a good time to purchase a home rose to 68 percent in September, a four percentage point increase from August. Also, the share of Americans who said they’d prefer to buy a home on their next move rose to 66 percent, following a three-point drop the previous month. The percentage of those who said now is a good time to sell grew to 39 percent. People surveyed also were more upbeat about home prices rising in the next 12 months, with expectations of price gains averaging 2.2 percent.
Economy Improving
Consumers are also feeling bullish about the overall economy, with 40 percent now saying the economy is on the right track, a five percentage point gain from August levels.
“The National Housing Survey shows a slight recovery in consumer housing sentiment after a mild setback, bringing us back to the modestly positive trend we’ve seen over the last year,” says Doug Duncan, senior vice president and chief economist at Fannie Mae. “It might be too late to save this year’s home sales from posting the first decline in five years. However, the return to an upward trend in housing sentiment, combined with this month’s positive news on the jobs front, suggests that a broad-based, albeit measured, housing recovery is on track to resume in 2015.”
If anything, misinformed buyers threaten to hold back the market. A Wells Fargo mortgage survey found that many potential homebuyers are misinformed about what it takes to buy a house, and that misinformation may be keeping them out of the market. The survey found that two-third of respondents believed they needed a high credit score to buy a home and a down payment of at least 20 percent. Wells Fargo notes that FHA has programs where it will insure buyers with lower credit scores, and in some cases down payments can be as low as 3.5 percent. Wells Fargo said a lot of misinformation has been spread since the real estate recession and the government and lenders began taking drastic steps to stem losses.
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