Americans optimistic about home prices

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New data shows that home prices are soaring, and despite warnings from some industry experts and analysts, most Americans are very confident that prices will continue to rise.

A majority of U.S. adults (64% to be exact) continue to believe home prices in their local area will increase over the year, according to the results of a recent survey by polling firm Gallup. This reflects an increase of nine percentage points over the last two years and is the highest percentage since before the housing market crash and Great Recession in the mid-2000s. 

In 2005, 70% of adults in the U.S. believed home prices would continue to increase in their area. That statistic was recorded less than one year before the peak of the housing market bubble in 2006, which was largely caused by an overwhelmingly high level of subprime lending practices.

Fast forward four years later to 2009 in the midst of the Great Recession; only 22 percent of U.S. adults believed that home prices would go up.

Now, housing analysts are cautioning people that the market could be in danger of a bubble yet again. According to research from Attom Data Solutions and reported by Realtor.com, the number of U.S. homes being bought and sold within a year (aka flipped) reached an 11-year high last year with more than 200,000 homes being flipped for a second consecutive year. For perspective, house flipping peaked at 334,000 homes in 2005 and again just before the overall housing market’s peak.

Regardless, most Americans remain optimistic that home prices will gain strength. According to Realtor.com, the median list price is currently at $273,663, approximately 20% higher than in both March 2015 and March 2005. Between 2015 and 2016 the national median listing price only rose 7.4% compared to the previous year.

About the Survey

Gallup first began surveying people about their attitudes on the housing market in 1978. Over the last 40 years the percentage of people saying it is a good time to buy a home has never fallen below 50%.

“Along with 2006-2008, 1978 represented another low point,” the report said. “That year, interest rates on mortgages were around 10%. The all-time high percentage saying it is a good time to buy a house was 81% in 2003, when home prices were increasing rapidly and the federal government and banks were devising policies to increase home ownership.”

Regional differences were apparent in the survey results, according to Realtor.com. Opinions varied between the West and East coasts with only 59% of Western residents believing home prices will increase, compared to 65% to 68% in other regions.

Differences were also apparent between homeowners and renters. Around 70% of homeowners said they believe prices will go up, while only 59% of renters believed the same.

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