60% of Americans will not buy homes in the next two years

[stephendare]

http://www.huffingtonpost.com/2008/04/14/poll-60-percent-of-americ_n_96502.html

WASHINGTON â€" 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.

"This is a great time to buy, but not necessarily to sell," said Robert Jackson, who lives in a two-bedroom house in Ferguson, Mo., with his wife and four young children. He said he would love to purchase a larger home, but can't because even if he found a buyer, he would probably lose thousands on his house, which he bought less than two years ago.

"We're just going to have to slap a Band-Aid on it and stay here until the market gets a little bit better," Jackson, 30, said in a follow-up interview.

Jackson is not alone. Sixty percent said they definitely won't buy a home in the next two years, up from 53 percent who said so in an AP-AOL poll in September 2006. At the same time, just 11 percent are certain or very likely to buy soon, down from 15 percent 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 percent. Half say homes are overpriced _ especially in the Northeast _ while those saying housing is underpriced have doubled to one in 10, particularly Midwesterners.

Some pockets buck regional trends. Laurie Jensen, a single mother of three, struggles to make payments on her home in Whitehall, Mont., by working as a seasonal road construction flagger and at times collecting unemployment. She said she'd like to move outside of town, but the area is popular and prices have surged.

"Things are pretty crazy," she said. "Places I don't consider that great are really expensive."

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.

Daniel Gallego, a warehouse worker in Stockton, Calif., said he may have to sell his home at a big loss. He said rising gasoline and other costs have made his adjustable rate mortgage unaffordable. Because he doesn't expect his home's value to recover soon, he said he may be better off moving now, before his rates rise.

"We may have to move in with my wife's parents or my parents," said Gallego, 30, who has two young children. "I could pay off some debt, then we could rent, and maybe buy another house in a few years."

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 Economy.com, 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.

"So the value of your house goes down temporarily," he said. Unless the homeowner must sell now or can't afford the payments, "that doesn't have that much of an impact."

The poll also found:

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

_Fifty-nine percent 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.

[Charleston native]

OK, the study has conflicting results. 60% polled said that Americans will not buy homes in the next two years...but 59% said that now is a good time to buy a home? 

Well, this is from HuffPo, so I would expect common sense to be non-existent, but man...the study conflicts with itself.

[Jason]

I'd buy a second home as an investment property if I had the extra money.  I would not, however, buy a new home to replace my old one for fear of not being able to sell the one I'm in, much less make a profit on it.

[Driven1]

i think in 6-9 months, it may be time to start looking again for investment properties - but only bank-owned where they are still willing to negotiate...would not be in the market for a new primary residence then though

[Charleston native]

What I'm primarily worried about is being able to sell my current home at a decent price to use the cash as a downpayment for our future home, especially if I land a hospital/health care job in another city such as Jax. This strategy could put me and my family in a very precarious position. I only hope that the real estate market can remain somewhat stable, so I can at least get some money back from our Columbia home. Maybe the real estate market downturn in FL will turn into our advantage? Here's hoping!

[RiversideGator]

I think the article is largely useless.  Of course 60% of people dont plan on buying a home in the next year.  I dont either.  But, I am not pessimistic about the economy or the long term prospects for real estate either.  This falls under the category of "So What" IMO.

[Midway ®]

He's right. The space - time continuum begins and ends at his doorstep.

[RiversideGator]

Perhaps this is over your head, midway.  After all, it is a discussion involving the free market and logic.  My point is the thrust of the article is that this survey is bad news for the housing market but that the data from the survey really shows nothing because the vast majority of people would not be looking to buy now regardless of market conditions since the vast majority of people do not buy a home every year.  I am referring specifically to this:

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

This is not to say that there arent concerns out there with the real estate market but this is a bit overblown.  There was one kernel of good information contained in the article though:

Fifty-nine percent think now is a good time to buy.

[Downtown Dweller]

40% of the 60% most likely should not, (and now that the “creative financing” that has been sold over the past couple of years is gone can not even if they wanted to) buy a home.

[Charleston native]

Well, Stephen, the AP hasn't necessarily had a great reputation in accurate reporting, either.

My point was pretty well summed up by RG. They (the press) want to create a negative, pessimistic view on the state of the real estate economy, when the reality is that it's just a fluctuation. Like RG quoted in the last statement...you still have a higher percentage with an optimistic view on the market.

[Midway ®]

Perhaps this is over your head, midway.  After all, it is a discussion involving the free market and logic.  My point is the thrust of the article is that this survey is bad news for the housing market but that the data from the survey really shows nothing because the vast majority of people would not be looking to buy now regardless of market conditions since the vast majority of people do not buy a home every year.  I am referring specifically to this:

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

This is not to say that there arent concerns out there with the real estate market but this is a bit overblown.  There was one kernel of good information contained in the article though:

Fifty-nine percent think now is a good time to buy.

Why are you attacking me? I am agreeing with you.  Since you're not buying a house this year, neither will I.

[RiversideGator]

When I am ready to make a move, you will be the first to know.   

[jaxphotocat]

Now is a good time to buy.... the catch is does someone have the money/cash flow to do so?

For years now the middle class has been taking a beating.  It should come as no surprise that sales are tough in real estate if people's earnings are weak.

I teach at FCCJ and I know of a few young faculty that either can not buy a home or need a major break or deal for it to happen.  If someone has an advance degree and is in a steady field and can at best barely buy a low-end home then how good can a market be?

[Springfield Girl]

Nothing should keep a first time buyer from purchasing a home except for bad credit. If you can pay rent you can own a home. It won't be your dream home but it will serve its purpose. I bought my first home when I was 23 using my tax return as a down payment. It was a concrete block box with one 30's era bathroom and an 8ft by 8ft kitchen and I loved it. Now is the time to buy! Find a knowledgeable Realtor and mortgage lender who will help you find the right property and programs.

[uptowngirl]

I think you hit it Springfield Girl. Bad credit aside, just about anyone can buy a home today, prices have dropped nationwide. The real issue here is people's idea of a first time home. My first home too was a little box, and I was proud to have it. A first time home buyer normally does not buy a $500,000 dollar home. There are some very nice cheap houses that are in move in condition, very cute and unique in Brentwood right now, a few close to the Greek stage in Brentwood Park. There is one that looks like a little mini castle that is for sale for 38K it is very cute, has original woodwork, fireplace, hardwood floors, and tile. I would buy if I was looking for a first time house or rental, in fact I almost did.