Housing Market Poll Illustrates Buyers’ Concerns

The sizzling days for home price growth are over, but it’s still a hard bargain for people looking to buy a slice of the American dream.

According to The Coloradoan, 80 percent of Americans believe it’s difficult for most first-time buyers to afford a home. Many people (59 percent in all) believe the current situation is worse than five years ago.

Younger adults and minorities in particular view affordability as more of a problem now for first-time buyers nowadays, compared with five years ago.

By region, 68 percent of those in the West and 63 percent of those in the Northeast say it is more difficult for first-time buyers to afford a home than it was in 2000. Meanwhile, 54 percent took a similar view in the South, while 51 percent felt this way in the Midwest.

The U.S. Census department reported recently that a third of the American homeowners with home loans spent 30 percent or more of their incomes last year on housing costs.

Those costs — which encapsulate mortgage payments, taxes, insurance and utilities — are usually considered excessive once people hit 30 percent of their income.

Rapidly-rising housing prices during the five-year housing boom are a big factor in this, economists say. The growth of mortgage rates compared to incomes has been cited as many people fail to keep up with inflation.

Nationwide, the housing market has really taken off as median home values jumped 32 percent from 2000-2005, reaching $167,500. And even though home prices have cooled this year, some people think they are still too high.

The poll found that 46 percent of those surveyed thought the housing market in their area is overpriced. Almost the same amount (45 percent) believed their market was priced about right. Only 5 percent thought their market was underpriced, with the remaining few having no opinion.

People in Massachusetts, for instance, are more likely to view current conditions as overvalued, as inventory continues to amass and sales drop.

A study by Moody’s Economy.com predicts falling prices will be primarily seen in the states of California and Florida, as well as the Northeast portion of the U.S., and some parts of Nevada and Arizona.

On the flip side, places such as the Michigan housing market, where growth has been more moderate over the past five years, won’t see declines as sharp, if at all.

The poll of 2,001 adults, including 289 recent homebuyers and 401 likely future homebuyers, was conducted by telephone September 19-26. Below are some demographics and details from the poll on home buying:

OVERALL

• Almost half, 46 percent, of Americans say that the housing market in their area is overpriced.
• About the same number, 49 percent, believe that housing prices in their area will go up in the next two years.
• Younger people, those with at least some college education, and those with household incomes greater than $75,000. are among those most likely to have purchased a home in the past two years.
• Rising home loan rates, at 84 percent, were cited most often as something most future homebuyers worry about when thinking about buying a home. Slightly fewer, 78 percent, worry about paying more than the fair market value at the time.

HOUSING COSTS

• Residents of the West (56 percent) and Northeast (55 percent) are more likely to believe the housing market is overpriced than those in the South and Midwest.
• Suburbanites (53 percent) were more likely to say the market is overpriced than those living in urban (39 percent) and rural (40 percent) areas.
• Minorities and those with lower incomes and less education tend to believe that housing prices will go up in the next two years.

KEY FACTORS IN BUYING

• Quality of construction: 87 percent
• Price: 79 percent
• Quality of schools: 68 percent
• Possibility of appreciation in value: 57 percent
• Closet and storage space: 54 percent