Each month, Fannie Mae takes a poll of Americans to gauge consumer sentiment. July results, based on a survey of 1,000 consumers, seems to indicate a slight shift toward lower optimism.
Fortunately, this could mean upcoming opportunity for buyers.
Those who feel it is a good time to buy a home dipped to 61% from a recent high of 66%. Consumers are still confident about housing, but times of red-hot markets and bidding wars could be coming to an end. This is not a bad thing for those looking to buy in the next year.
Causes of Lower Confidence
The root of diminished confidence might not be found in real estate but in overall economic outlook.
Consumers who said they expect their personal financial situation to improve over the next year fell to 44% from 47% in June, putting an end to its upward climb. And, 15% said that their household income is significantly lower than it was 12 months ago.
Timing could have influenced the results as well. As pointed out by Doug Duncan, senior vice president and chief economist at Fannie Mae, the survey was taken just as news reports of Greece’s financial meltdown and China’s stock market plummet was happening. When the global economy is called into question, people tend to worry about how it might affect financial matters here in the States.
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Consumers Still Predicting Higher Prices
About half of consumers expect home prices to increase over the next 12 months. The average price increase expectation is predicted to be 3%. Only 8% think that home prices will go down.
Last year consumers thought home values would rise 2.9%, but the actual increase was over 5% and even more in certain geographic areas. The average consumer is not very good at predicting markets.
That being said, home prices have been gradually moving upward, and the survey indicates that more consumers have taken notice. It could also mean that anyone who is considering a home purchase might not want to wait too much longer.
Rising mortgage interest rates could soon become a factor. A 1% increase in rates means an 11% drop in buying power.
Another survey response worth noting, however, is that 65% of people said that they would buy instead of rent if they had to move. Despite being down on buying, most respondents still feel it’s a better option than moving into a rental.
Capitalize on Diminished Consumer Sentiment
The best way to get a good deal on a home is to buy when no one else wants to. While buying a home is nowhere near unpopular, it could be easier to find a good value than it was just a few months ago.
As consumer sentiment about real estate wanes, opportunistic buyers rush in. Having less competition is always a good thing when buying a home.
Those who are in the market for a home should keep on top of current mortgage interest rates and get pre-approved before seriously looking. Buyers who are prepared will get the best deals and close more quickly.
Click here to request a pre-approval today.
Dawn Papandrea is a Staten Island, NY-based freelance writer who specializes in personal finance, parenting, and lifestyle topics. Her work has appeared in Family Circle, WomansDay.com, Parents, CreditCards.com, and more. Visit Dawn on Google+and at her website.