Despite the fact that housing prices are hitting record highs in many real estate markets, most U.S. adults believe both that home prices will continue to rise in the next year and that now is a good time to buy a home. According to a new Gallup Poll on the subject, 69 percent of U.S. adults say they are optimistic about home prices rising over the next year. That is just one percentage point lower than the number who said prices would continue rising over the next year in 2005. In early 2006, the market peaked and then began a major correction that resulted in the housing market crash and the Great Recession.
By comparison, in 2009, only about a fifth (22 percent) of Americans believed home prices would rise in the next year. Today, one in 10 believe prices will fall, compared to one in 20 who believed this in 2005. Interestingly, 70 percent of homeowners said they believed prices would continue to rise, while 59 percent of renters said the same. “Since 2016, there have been meaningful increases in the percentage of residents expecting home values to rise in all regions but the South,” noted Gallup analysts. While southern residents might seem less optimistic at first, this less significant increase in optimism may be due to the fact that nearly two-thirds of that population has believed prices would continue rising since 2016.
This type of public sentiment may be good for driving up home prices in the short term, but it could be indicative of a pending market swing in the longer term. “High demand and limited supply of homes are putting upward pressure on home prices, leading many real estate experts to urge prospective buyers to get into the market now before rising prices and interest rates make homes too expensive to afford,” observed Gallup analysts. They noted, however, that Americans “appear to be aware of housing market conditions” and “are less optimistic than they were four years ago, when houses were more affordable and interest rates were lower.”
Investor Insight:
With most U.S. adults believing now is a good time to buy a house despite record-high prices in many areas, optimism about homeownership and home prices is nearing the peaks it hit just before the housing market crashed in the mid-2000s.
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