House Price Confusion and Continued Pessimism Among Consumers Revealed By Latest Polls

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Consumer sentiment regarding home prices impacts much more than the real estate market

San Diego, CA (PRWEB) January 19, 2010

San Deigo, Calif., January 19, 2010 -- Despite the fact that US home prices have been rising over the past several months and appear to have stabilized, the majority of Americans believe that house prices have still not hit their low, according to a recent series of polls conducted on behalf of HomeSpace.com. Of particular interest, the polls highlight a discrepancy between American consumers' predictions of home price trends and the views of leading economists.

The polls, conducted on HomeSpace.com and its sister site RealEstate.com, reached a combined total of over 25,000 consumers with an interest in the direction of US house prices. A sample group was asked whether or not they were in arrears or foreclosure. Regan Carey, PhD, who headed the study, said, "Although the polls were anonymous, it is clear that a significant percentage of respondents were reticent to declare the status of their mortgage. As such, it was not possible to accurately determine the difference in opinion based upon status. However, in the follow up survey to be run in the spring, HomeSpace.com will survey registered consumers of known status. We look forward to publishing the longitudinal data as the market recovers."

Although the Associated Press reported that home prices in the US rose steadily from May to October of 2009, slightly over 75% of those surveyed predicted that US house prices would fall more than 2% before stabilizing, with 30.4% predicting that prices would drop by a further 5% during 2010. Only a minority (21%) of those polled believed that US house prices have already bottomed out. The time estimated before a turnaround was particularly interesting, with 62.8% believing that the bottom would not be reached for at least six months, and 17.1% predicting that house prices would fall for another two years before reaching their low point.

These results come in the wake of a recent Reuters.com poll, which surveyed a group of housing industry economics experts about their forecasts for the housing market in the upcoming year. Most of those surveyed--from organizations such as Standard and Poor's, LendingTree.com, TD Securities, JP Morgan Chase, and Bank of America--believed that housing prices have already reached their lowest point. In fact, most of those surveyed predicted that US housing prices would rise by at least 2.5% in 2010. Despite this, according to a December 29th Consumer Confidence Survey conducted by The Conference Board, while consumer confidence is up as a whole, it has dipped in several areas, and the Present Situation Index--which measures overall sentiments regarding the current economic situation--is at a 26-year low.

This discrepancy between American consumers' perceptions of the state of the US housing market and industry experts' predictions indicates a cynicism regarding the ability of 'experts' to predict trends in the future of the US real estate market. "Consumer sentiment regarding home prices impacts much more than the real estate market," notes Dr. Carey. "As home values increase and inventory becomes scarcer, homeowners feel wealthier, irrespective of their access to free capital. As a result, they are more likely to drive the economy through increased spending. With so many homeowners underwater on their mortgages, it's clear that there needs to be a dramatic shift in sentiment before the Catch-22 of high inventory and stagnant prices will be resolved."

Further details of the HomeSpace.com polls are available at RealEstate.com.

About HomeSpace.com
HomeSpace.com is a blog that covers regional property and housing markets around the US. Contributors to the blog include a dedicated research and editorial team, together with independent residential property specialists in specific geographic markets.

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