Consumer confidence is an important factor in the housing market. In a recent Gallup poll, 61 percent of Americans said they feel confident that housing prices will continue to climb over the next year.

This is the highest measure of real estate optimism since 2005, and the number is up six points for what Gallup released last year. This positive outlook has been rising steadily since the market’s crash and recovery – 2009 was the low point when only 22 percent of American adults felt there was a chance that housing prices would go up.

That negative view dominated the real estate world from 2008 through 2012. It wasn’t until 2013 that large numbers of residents started predicting prices would rise, and 2017 is the first year that the percentage of people expecting gains climbed above 60 percent.

The first year Gallup included this question about value speculation was in 2005. That year also saw the highest number of optimistic responders, with 70 percent expecting prices to go up. Home values went on to hit peak prices in 2006.

The current numbers are right on trend with the last decade, as home values have gone up steadily since 2012, after declining from 2007 until 2011. This year, while a majority predict continuing increases, there are still 28 percent of people who foresee no change and 10 percent expecting prices to go down.

These assessments do vary depending on region. In the Western states, nearly 75 percent of people expect increases, whereas just over half of those living in the Midwest and Eastern states expect sustained value growth. Not surprisingly, the West saw some of the biggest price jumps in 2016.

The varying expectations are a continuing regional trend, as Western U.S. residents have predicted housing price increases more commonly than the rest of the country for the last few years.

Along with a majority belief that prices will keep rising, two-thirds of Americans also think the market is currently buyer-friendly. The remaining percentage think now is not the best time to buy, and these numbers are fairly consistent with Gallup’s findings from the last two years. The percentage of people saying it’s a good time to buy is down slightly from the 70 percent mark hit between 2012 and 2014.

The belief that now is a good time to buy is virtually always the opinion of the majority in America. It was only from 2006 to 2008, as the initial signs of crisis were becoming evident, that just 50 percent of people said investing in a house was a smart decision.

These numbers indicate consumer opinions are driven by both the growth of the market and the personal belief that houses make for a strong investment. Most polls show the majority of Americans consider real estate the top option for investing their capital.

Unlike the predictions on pricing increases, these time-to-buy statistics are not regionally dependent. Instead, the divide is between homeowners and renters. 74 percent of people who own a home say now is a good time to buy, while only 56 percent of people renting feel the same way.

While most Americans speak favorably of home buying, fewer residents currently own a house now than in years past. Prior to the crash, 72 percent of adults claimed homeownership. That number is now notably lower, averaging at 61 percent since 2015.

The drop in ownership may be driving down the number of people who say now is the right time to buy. There’s also the issue of affordability, as many people are either priced out or don’t believe the current high prices are sustainable.

A major takeaway from the Gallup numbers is how Americans are very aware of housing trends. Since values have risen steadily over the last half-decade, most residents predict that trend will continue. People might not be quite as optimistic as they were in 2005, but the percentage is as high as it has been since the crash.

One of the main concerns now is whether the U.S. is looking at another housing bubble. Fortunately, even though prices are nearing their 2006 numbers, lower interest rates and fewer high-risk mortgages are keeping most of those fears at bay. However, changes in either of those factors will definitely raise some red flags.

By all measures, both from Gallup and the American people, now seems to be a decent time to buy a house. Of course, with the 2007 crash still a recent memory, most prospective buyers are being cautious with this decision.

If you’re interested in buying or selling a Luxury Home in Los Angeles, please contact us now at 323-829-8811 or email Susan Andrews at susan@luxurylahomes.com.

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