Most American Consumers Think There House is Worth More
The American consumer – always the eternal optimist, but probably a little disconnected from the market (Yahoo):
Although existing homes are selling at their slowest pace in four years, most Americans are confident their homes are worth more now than they were a year ago, according to a survey released on Thursday.
A poll conducted by the Boston Consulting Group found that 55 percent of Americans believe their house would sell for more money now than last year, compared with 59 percent who felt the same way last summer. Eighty-five percent expect their home to be worth even more in five years than it is now.
According to the Office of Federal Housing Enterprise Oversight, the average U.S. home price rose 4.3 percent over the year ended in the first quarter, the smallest gain in nearly a decade.
The reason that the price of homes are going up (or appear to be going up) is that the sale of starter homes as a percentage of the total mix of homes is declining, thereby skewing the prices upward.
The softening housing market also appears to have had little impact on spending behavior. Seventy-six percent of participants in the nationwide telephone survey say it hasn't affected their spending at all.
Most predict the slump will last two years. . . .
If most people plan to live in their house for 2 years or more the results of the survey are not surprising. Their goal is to ride through the trough in housing prices. The only consumers that could be hurt by declining housing prices are those that have to sell.