I think it’s safe to say that many of us have been anticipating spring’s warm weather; if not for a change of pace from arctic temperatures, it’s the season that the housing market swings into top gear.
However, Fannie Mae’s March 2015 National Housing Survey™ may support anecdotal reports of home buyer attitudes toward home prices and is making some re-think their estimation of the spring market.
The April 7th Fannie Mae (fanniemae.com) press release titled, “Lackluster Income Growth Weighing on Americans’ Housing Sentiment: Share of Consumers Expecting to Buy a Home on Next Move Reaches Survey Low” might convey that not all home buyers are looking to buy a home this year. However, the news is not all gloom and doom. Although the survey indicated that 60 percent of respondents said they would buy a home if they were to move, which is an all-time survey low; the percentage of those who responded that it was a good time to buy a home hit an all-time survey high. Additionally, there were fewer respondents in March’s survey who felt their financial situation would improve in the next year.
The survey is described by Fannie Mae as “The most detailed consumer attitudinal survey of its kind.” It polls 1,000 Americans on their attitudes about such things that include (but is not limited to) homeownership, the economy, household finances, and overall consumer confidence. Fannie Mae senior vice president and chief economist Doug Duncan remarked about the March survey: “… results emphasize how critical attitudes about income growth are to consumers’ outlook on housing.” However, consumer sentiment should improve as income growth is realized.
Fannie Mae’s March survey is coming on the heels of news of a possible economic slowdown. The Wall Street Journal’s Kate Davidson reported on March 25th (GDP Growth Estimates Tumble, Again: wsj.com) that the latest Gross Domestic Product estimates may be a repeat of last year. While several Wall Street economists revised lower their Q1 2015 GDP estimates from 0.9 percent to 1.5 percent, the Federal Reserve Bank of Atlanta lowered their Q1 2015 GDP estimate to 0.2 percent.
If last year’s pattern is being realized, the survey’s consumer sentiment and economic news is just a blip on the radar. Remember that the Q1 2014 GDP was negative as the economy retracted, however rebounding with 5 percent third quarter growth. Likewise, 2014 home sales rebounded later in the year only finishing the year only 3 percent behind 2013 (according to the National Association of Realtors®). And as the NAR reported on March 30th that pending home sales rose during February, it is estimated that existing home sales will increase 6.4 percent during 2015 compared to 2014 (realtor.org).
The upshot of this data could be that consumers are saying is that it’s a good time to buy a home, but only if you can afford it. However, it’s not just about the dollar amount; home buyers are increasingly demanding value for their money. Buyers are looking at the bigger picture of the costs of homeownership including maintenance and commute to work. And this attitude can be reflected in home buyers’ push back on home prices.
If you’re a home seller, relatively low housing inventory is good news; but pricing your home correctly may be the definitive factor. And as you might anticipate home buyers competing for your home; consider that some have reported that that low appraisals have impacted their sale.
Dan Krell is a Realtor® with RE/MAX All Pro in Rockville, MD. You can access more information at www.DanKrell.com.