Four factors – uncertainty about future prices, concern about the economy and jobs, concerns about their credit and difficulty saving for down payments – are causing buyers to delay their purchases, dramatically reducing near-term demand.
That”s a key finding from the latest national survey on housing released today by online real estate leader Move, Inc.
The survey found that while one quarter of all Americans (27.3%) plan to buy a home in the future, only two percent plan to purchase in the next 12 months and 23.1 percent say they”ve delayed purchasing a home because of the real estate market in their area.
Based on survey results, half (55.1%) of those planning to buy in two or more years are waiting in part because they lack the money for a down payment or closing costs. Some 52.5 percent said they”re concerned about their jobs or lack confidence in the economy as a whole. Half (53.1%) of today”s future buyers said they”re waiting because they expect prices to stabilize or increase. More than one third (34.6%) said their inability to get credit or find affordable credit is a reason why they”re waiting to buy a home.
The survey also found perceptions on affordability have deteriorated in the past 18 months. In March 2010, 45.4 percent said they thought a median income family could afford more than half (50%) of the homes for sale in their neighborhood. Today, only 32 percent said they think median income families can afford more than half (50%) of the homes for sale in their area. In August 2011, the median priced home sold for $168,400 and the qualifying income was $33,504 . The real median household income in 2010 was $49,445 .
“Perceptions as much as the realities of homeownership are standing in the way of boosting demand for housing,” said Samuelson. “Concerns that the economy will continue to put jobs at risk and that prices won”t rise near term are keeping buyers on the sidelines as much as the difficulty they”re having in getting credit or saving for down payments. Until these concerns are resolved, we expect both buyers and sellers to remain on the sidelines.”
The number of homeowners who delayed selling their home because of the real estate market (17.5%) has not grown in the past 18 months but actually declined slightly (-1.7%), which suggests the pending supply of “visible” homes is showing signs of stabilization. However, more homeowners ages 35 to 49 (22%) and those making $40,000-$49,000 a year (21%) said they”ve delayed selling their home in the past year as compared to other respondents. This may indicate growing families in need of more space are having a difficult time moving up as a result of today”s market conditions.
Moreover, after years of low prices that left many with negative equity, today”s homeowners are less tempted to sell in response to incremental price increases than they were in 2009. Price increases in June 2009 of 20 percent or less would have motivated 61.6 percent of homeowners to sell. Today, however, price increases of 20 percent of less would motivate 55.4 percent. Based on the survey, a 5 percent increase in prices today would motivate 11.7 percent of owners to sell their home. The decline in pending price-motivated inventory suggests many owners may have sold their homes when the tax credit temporarily raised prices in 2010.