denial / hope/ brainwashed Most expect their home's value to rise in next few years
Most expect their home's value to rise in next few years http://tinyurl.com/lx3j4
The national housing data may suggest a gloomy residential real estate market but a new survey shows many homeowners remain upbeat, at least concerning their own homes
The second annual RBC Capital Markets Consumer Survey, released Wednesday, found that 46% of all homeowners still expect at least a 5% annual increase in their home values over the next few years. Nearly 60% of homeowners expected the same in last year's survey.
The national survey was conducted online between Sept. 7 and 15; 1,003 people participated.
About 76% of homeowners expect the value of their homes to increase at some rate over the next few years. Thirty percent expect their home to increase in value between 5% and 10% annually during the next few years and 16% expect their home to go up by 10% or more.
According to the survey, about 19% expect their home values will stay the same; only 6% said their home value probably decrease over the next few years.
"While real estate expectations are lower than they were last year, consumers still seem optimistic despite what we are seeing in the marketplace," Scot Ciccarelli, managing director and equity research analyst for RBC Capital Markets, said in a news release
Although about 40% of participants in the RBC survey acknowledged that home prices were coming down in their area, 35% said prices were going up. Twenty-five percent said prices have leveled out.
More than 80% of homeowners surveyed said they have at least $50,000 of equity built up in their homes, and fewer than one in 10 participants worry that their mortgage might exceed the value of their homes if housing prices declined during the coming years. (bei der entwicklung kein wunder/no wonder)
The survey also indicated 25% of homeowners have already paid off their mortgage, a finding surprising to Ciccarelli.
"While it's true that it may be easier to pay off a mortgage in Selinsgrove, Pa., than it is in New York City, we were still very surprised that the number was so high," he said. "This goes against the general belief that most Americans are leveraged to the hilt."
About 13% said they had variable-rate or interest-only mortgages and nearly 40% of participants with those products are concerned about their ability to meet higher payments.
Thirteen percent haven't considered the possible consequences of the mortgage products when their rates reset.
Effect on consumer spending and saving
The results also hinted that a certain wealth effect had been at work over the past three years for some homeowners.
Seventy percent said their home had increased in value by 10% or more over the past three years and nearly 29% said their values had increased by 25% or more. Of those whose homes achieved the greater appreciation level, six out of 10 of agreed that their rising home value had given them some spending leeway.
"Declining real estate values could eventually impact consumer spending as people don't feel as wealthy as they used to and become less likely to borrow against the equity they have built up in their homes," Ciccarelli said.
The survey also found:
Those making more than $100,000 were three times as likely to regularly save money as those who earned less than $50,000. Nearly half of those in the lower income bracket said they were living paycheck to paycheck or had to dip into their savings.
Half of those surveyed don't expect to change their spending habits over the next year. Those who expected to rein in their spending often weren't planning on tightening their budgets when it came to home improvements and automobile costs.
Geopolitical tensions and terrorism topped consumers' worry list, followed by gas prices, rising medical bills, employment concerns and interest rates