Consumer Optimism & Reality Check for Buyers

When the recession hit few years ago, many Americans looked for ways to cut their expenses and lot of Americans postponed their decision to buy home. Many home owners downsized and prospective home buyers looked for smaller and green homes in order to reduce their buying cost. As they say in economics everything is a cycle. What goes up has to come down and what goes down has to come up! To prove that statement true one more time, housing market has slowly come back and will be back to pre-recession state soon which was attested by few months of encouraging housing market news. With that encouraging news many Americans starting to go back to the pre-recession times and looking for better and bigger homes which survey clearly reveals.

Consumer Optimism
To get American’s take on homeownership, Trulia works with Harris Interactive to conduct an online survey of 2,205 U.S. adults between May 22-24 and 2,230 U.S. adults between June 4-6. They been doing this survey since 2008 and published the survey report accordingly.

As per the American Dream survey, consumer optimism is rebounding faster than the housing market itself is. Sixty-one percent of Americans think that home prices in their local market will rise in the next year and 58% of Americans believe local home prices will return to their previous bubble-level peaks within the next 10 years! Prospective homebuyers are looking at bigger homes, thinking more seriously about buying and optimistically hoping for higher home prices in both the short-term and long-term. Here is infographics released by Trulia,

If you see the graphics you will notice that 27% of Americans said their ideal home size is over 2,600 square feet–up from 17% in 2011. Furthermore, the “super-sized” house category, 3,200 square feet and up, saw an even more dramatic increase in interest. While just 6% of those surveyed in 2011 expressed desire for a super-sized home, 11% now say they want a home of this size — that’s almost double a year ago.

Renters Expectation
Sentiments among renters have also improved. Seventy-eight percent of renters said that they plan to purchase a home someday, up from 72% in 2011, and 27% of renters want to buy in the next two years, compared with only 22% in 2011.

They also have high hopes in getting their needed home with better amenties. In the survey, they asked current renters which amenities they would love to have in the first home that they buy. While the most desired features were a master bathroom (63%), a walk-in closet (56%) and a gourmet kitchen (50%), only 26%, 35% and 9% of actual home buyers reported having these respective features in the first home. Here is another infographics which sheds more light on the topic.

Even though the homeownership rate has dropped, more renters are now thinking about buying a home. Job growth, low interest rates and ever-rising rents have pushed up renter interest in home buying. Now, 78% of renters said that they plan to purchase a home someday, up from 72% in early 2011. More than a quarter of renters (27%) want to buy in the next two years, compared with 22% in 2011. That’s a big increase.

It is not going to be easy task as things have changed a lot after the struggle we been through during the subprime crisis and too many financial new rules have put in place to make sure it won’t happen again. Because of that reason, buyers face very serious hurdles to achieving their dream. Tellingly, 47% were concerned about being able to make a down payment, 32% said poor credit history could be an issue and 25% wondered if they would even qualify for a mortgage. Even though consumers may be more willing than ever to buy, they may be in for a rude awakening when it comes time to pull together a downpayment and apply for a loan.

To learn more about the survey, go to Trulia Survey page.

About Vijaianand Thirnageswaram

I am a Proud Realtor of Texas, trying to guide and help clients to find their dream home and educate them to buy them for right price. I am also a Candidate for CFP who has more financial knowledge which allows me share and educate clients in any financial decision making process.

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One Response to “Consumer Optimism & Reality Check for Buyers”

  1. Jason says:

    We’re certainly happy seeing figures like these, but truthfully, many of our clients have always wanted to ask for extras up front, which ends up increasing the size of homes to a degree. I always tell people two things; one, not to price themselves out of a home by asking for things they might never need, but also to always look at a house as though you’re going to live in it a long time and make sure you get the space you’re looking for. This works especially for younger couples that might be thinking about starting a family, but haven’t decided on how many children.

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