Two new public opinion surveys taken last week found encouraging stirrings of consumer confidence and pent- up demand for homeownership.
A new national survey conducted last weekend and commissioned by Move, Inc. found that 23 percent of adults plan to purchase a home in the next five years, and more than half of them are first-time homebuyers, even though half of all Americans are concerned they or someone they know will face foreclosure in the next six to 12 months.
The Move survey also found nearly one out of five home owners plan to take advantage of the Administration’s new program to help prevent foreclosures. While searching for answers in the past 12 months, 21 percent of all homeowners with a mortgage contacted a lender to restructure their loan. Half of those homeowners who contacted their lender experienced success while six percent still await an answer.
Despite today’s challenging market conditions, 18.1 percent of adults plan to buy a home this year in order to take advantage of the $8,000 tax credit recently passed by Congress in the Administration’s economic stimulus package.
The Move survey found the housing downturn, now entering its third year, has created significant demand for homeownership especially among first-time home buyers. While 5.8 percent plan to purchase a home in the next 12 months, 12.8 percent of Americans say they plan to buy a home in the next two years, and 11 percent plan to purchase a home in two to five years.
Over half of those planning to buy in 2009 are first-time homebuyers. By comparison, 41 percent of home buyers in 2008 were first-time homebuyers, according to the National Association of Realtors.
While 18.1 percent of first-time home buyers do plan to buy this year to take advantage of the $8,000 tax credit, nearly half (47.6 percent) said they didn’t know about the credit and 29.3 percent said it wasn’t large enough for them to act right now. Potential home buyers with higher incomes are more interested in the tax credit than those in lower income brackets, as 43.4 percent of first-time buyers earning $50,000 or more say they plan to use the tax credit.
The Gallup Poll’s daily tracking last week found that public optimism about the U.S. economy—although still scarce, with only 27 percent of Americans saying the economy is getting better and 67 percent saying it is getting worse—is now broader than at any point in Gallup’s 15 months of daily consumer polling.
Gallup began to see significant improvement in Americans’ evaluation of the economic direction last week, coinciding with the start of a sustained rebound in the Dow Jones Industrial Average since that index sank to a 12-year low on March 9. (See chart below).
Among different income groups, the most dramatic increase in economic optimism in March has been among those earning $90,000 or more—not surprising, given upper-income Americans’ greater investment in the stock market. In this group, optimism has grown from 10 percent saying the economy is “getting better” in early March to 27 percent last week. This top-earning group was initially the least likely to say the economy is getting better, but is now on par with middle-income earners, and closely.