Americans Less Certain Housing Market Has Bottomed

by devteam November 29th, 2010 | Share

Americansrnare still waiting for the housing market to hit bottom according to survey data released thisrnweek from the Third Quarter Fannie Mae National Housing Survey.  It found that a declining number of bothrnhomebuyers and renters think this is a good time to buy and an overwhelming andrngrowing majority are quite sure it’s a bad time to sell.  </p

Thernsurvey was conducted among 3,417 homeowners and renters during July, August andrnSeptember.  A random sample of 3,015 ofrnmembers of the general population which included 834 outright homeowners, 894rnrenters, and 1,156 mortgaged homeowners of whom 305 were self-identified asrnbeing underwater on their mortgages were interviewed by phone.  The survey also included an oversample of 402rnrandomly selected borrowers who had not paid on their mortgages in at least 60rndays.  Survey results were compared tornsimilar surveys conducted in January and June of this year and in Decemberrn2003.</p

Thernpercentage of Americans who think it is a good time to buy a home declined byrntwo percentage points from the June survey to 68 percent while 29 percent feelrnit is a bad time, an increase of 3 points.  rnIn June 83 percent of respondents viewed it as a bad time to sell, arnfigure that rose to 85 percent in the recent survey.  </p

Thernmargin separating those who expect home prices to rise during the next yearrnfrom those who expect them to fall has narrowed significantly. In June 31rnpercent were looking for an increase while 18 percent expected furtherrndeclines.  The current numbers are 25 percentrnand 22 percent respectively. The survey found that delinquent borrowers andrnpersons who owned their homes mortgage-free were more pessimistic about housingrnprices while borrowers who were underwater on their current mortgage andrnrenters were looking for a modest (1 percent or less) price increase. </p

Atrnthe same time, an overwhelming majority – 80 percent to 20 percent – arernlooking for rents to go up although in June the average expectation was for arn3.6 percent increase and today it is 2.8 percent.</p

“Consumer attitudesrntoward buying a home are more negative since last quarter,” said DougrnDuncan, Vice President and Chief Economist, Fannie Mae. “Our survey showsrnthat Americans’ declining optimism about housing and their personal finances isrnreinforcing increasingly realistic attitudes toward owning and renting.” </p

66 percent of American viewrnhomeownership as a safe investment, down 1 percent from June but 17 pointsrnsince the 2003 survey.  The percentagernwas significantly higher among homeowners, even if their mortgage is underwaterrn(71 and 72 percent) than it is among delinquent borrowers (54 percent) orrnrenters (56 percent.)  Delinquentrnborrowers, in fact, are 10 percent more likely to rent their next home than theyrnreported in January. 50 percent said they would prefer to rent compared to 45rnpercent who would buy.    Half of all respondents ranked homeownershiprnas less safe than putting money into a bank account.   </p

That their situation hasrntaken a toll is evident in other responses from the delinquent borrower group.  More than half (54 percent) say they are veryrnstressed and 82 percent say they are stressed. rnBoth numbers are up 1 point since June. rnOwning their home entailed a financial sacrifice for 88 percent of thesernborrowers with 69 percent saying they are making a great deal of a sacrifice.  These borrowers are also falling further intorndebt with 29 percent saying they have significantly increased their mortgagerndebt during the past year compared to 23 percent of other borrowers who havernreduced their debt.  Seven out of 10 believernthat their income is insufficient to cover their expenses while the 71 percentrnof the general population perceive their incomes as adequate. </p

When asked about otherrnaspects of their personal finance, 58 percent of Americans say that theirrnhousehold income has remained flat for the past year while 48 percent ofrndelinquent homeowners report a significant decrease.  In June the figure was 46 percent.  The percentage of Americans who feel theirrnpersonal finances will improve, at 41 percent, is for the first time, equal tornthe percentage who foresees no improvement.   </p

Forty-two percent ofrnAmericans know someone who has defaulted on a mortgage, an increase of 3rnpercent since June, a figure that is much higher among delinquent andrnunderwater borrowers at 63 percent and 58 percent respectively (compared to 56rnpercent and 48 percent in June.)  Respondentsrnwho know someone who has defaulted are more likely to have considered doing sornthemselves although the numbers among most subgroups are small. However, in therncase of delinquent borrowers who know a defaulter, 45 percent had consideredrndefaulting compared to 16 percent who did not know a defaulter.  But default is not viewed as a free pass. Fifty-fivernpercent of underwater borrowers, 51 percent of all mortgage borrowers, and 43rnpercent of delinquent borrowers (up 11, 6, and 6 percentage points sincernJanuary, respectively) think their lender would pursue other assets in additionrnto their home if they defaulted on their mortgage. </p

HERE is Fannie Mae’s Presentation of the Housing Survey Data. It contains many useful graphs and tables.

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of is prohibited.

About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

See all blogs


Leave a Comment

Leave a Reply

Latest Articles

Real Estate Investors Skip Paying Loans While Raising Billions

By John Gittelsohn August 24, 2020, 4:00 AM PDT Some of the largest real estate investors are walking away from Read More...

Late-Stage Delinquencies are Surging

Aug 21 2020, 11:59AM Like the report from Black Knight earlier today, the second quarter National Delinquency Survey from the Read More...

Published by the Federal Reserve Bank of San Francisco

It was recently published by the Federal Reserve Bank of San Francisco, which is about as official as you can Read More...