Sentiment among American consumers is that both home prices and rental fees are about to go up. At the same time, according to a Fannie Mae study, they’re feeling more financially secure. In combination, the two sentiments add up to the belief that it’s a good time to buy.
Here’s how the numbers in the Fannie Mae March 2012 survey converge: If prices are going to go up, this may be the last opportunity to take advantage of prices while they are still relatively low. And the fact that a sense of financial security is finally being restored means that more consumers will be confident enough to take the plunge.
“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.”
Here are highlights of the Fannie Mae survey
* 33% expect home prices to increase in the next 12 months
* The price increase will amount to a gain of 0.9%
* 39% expect mortgage rates to increase
* 73% say this is a good time to buy
* 48% expect rents to increase
* Rents are expected to rise 4.1% over the next year
* If moving, 66% would buy, 30% would rent
* 21% say their income is up over its level a year ago, 63% are at par
* Only 12% expect a reversal in their personal finances in the next 12 months
All pretty good, but now, a couple of downers
* 35% think the economy is on the right track, 58% say the wrong track
* 34% say their expenses have risen significantly compared to a year ago.
RBR-TVBR observation: Getting the housing market back in good health will have enormous benefits that will spill over into some economic sectors immediately and that will ultimately help all of the sectors. This is another relatively modest bit of good news, but if we keep getting modest bits of good news they will feed one another and develop the kind of groundswell we’ve all been waiting for.
And on the flip side, the modest good news presented in the Fannie Mae survey sure beats a return to the negative side.