Wednesday, March 08, 2006

Homeowners Not Buying Into Bubble Talk

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An LA Times/Bloomberg Poll says U.S. homeowners still expect their property to appreciate in value during the next six months, according to a front-page story in the LA Times today.

However, the story also points out that a lot of people are concerned about not being able to make their mortgage payments:
More than one-quarter of those who have adjustable-rate mortgages say they aren't sure they'll be able to make their monthly payments if their interest rate goes up. These loans have been particularly popular in California and other states with high housing costs.
This excerpt is from the actual poll summary:
The housing market continues to inspire confidence among U.S. homeowners, with only one in seven nationwide predicting a slide in home value over the next six months, compared to more than twice that number who predict that values will continue to climb. The average home price has risen 36% over the last three years, and the latest Los Angeles Times / Bloomberg News poll found most homeowners confident that the value of their homes would continue to rise over the next three years. About three out of four predicted a more than 5% rise in value, and a quarter said they felt that the increase would be more than 15%.

The housing market has a history of cyclical downturns and some economists have been predicting that the “housing price bubble” would have to burst since the rise in home prices in some areas has far outstripped any increases in income. But so far, those forecasts have not come to pass and the survey found homeowners feeling a sense of security about both the value of their property and their own personal finances. About eight out of 10 homeowners reported feeling secure about their finances, compared to half of renters. Homeowners were also more likely to say that the nation’s economy was in good shape. Renters tend to be younger, unmarried, less educated, and less affluent as well as less likely to be investors. Race plays a role as well - eight out of 10 white respondents own the place where they live, compared to half of everyone else.

— The Boy in the Big Housing Bubble