For Prospective Home Buyers, the Price Is Right : Real estate: But survey finds that concerns about California’s economy and fear of the buying process keep lid on sales.
Falling home prices and low mortgage rates have persuaded most Californians that this is an opportune time to purchase a house, but concerns about the future of the economy and unfamiliarity with how to buy a home are keeping many on the sidelines, according to a survey funded by the savings and loan industry.
The poll of 1,004 Californians found that two-thirds of the respondents believe that this is the best time to buy a home in years. Nearly one-third of the homeowners said they would like to buy a nicer house, while 28% of renters said they are looking for a new home to buy or expect to start house hunting within a year.
But while the survey found that pent-up demand for housing is growing, the researcher who directed the poll cautioned that the results do not necessarily foretell a sudden pickup in sales.
“Basically, we found that the desire to own a home is as strong as it has ever been, but (prospective) buyers still have some concerns” that could hold the market back for a while longer, said Hal Quinley of the Newport Beach office of Yankelovich Partners Inc., a national research firm based in Westport, Conn.
The poll, paid for by the California League of Savings Institutions, an industry trade group, was conducted in May and has a margin of error of plus or minus 3 percentage points. The poll results are due to be released today.
The survey included some troubling results that cloud the prospects for a long-term housing recovery.
For example, nearly 40% of respondents said the state will never fully recover from its current economic problems, casting doubt on the long-term wisdom of buying California real estate.
In addition, nearly three-quarters of all renters said they do not have all the information they need to select a good real estate agent, choose the best mortgage or make other important decisions that are part of the home buying process.
“Obviously, as an industry, we need to do a better job of educating prospective buyers,” said Mario Antoci, the trade group’s president and chairman of Stockton-based American Savings Bank.
Although home values statewide have fallen 10% to 50% since 1990, two-thirds of the poll respondents said they believe that buying a house in California is still a good investment and 80% said they believe that prices have bottomed out.
And although 75% of the respondents agreed that the state remains mired in recession, an identical percentage said their personal economic condition is “good” or “fairly good”--a finding that lenders say signals stronger sales in the future.
“It looks like people feel a lot better about their personal financial situation than economists and the media have given them credit for,” Antoci said.
Consumers have not been in a rush to purchase a home over the last year or so, Antoci said, in part because home prices have remained soft and interest rates have been gradually dropping, factors that fail to create “a sense of urgency among prospective buyers.” Rates on 30-year, fixed-rate mortgages settled at 7.19% last week, the lowest level in more than two decades.
Some analysts were surprised at many of the survey’s findings, especially those indicating that consumers are relatively optimistic about their current finances and the outlook for home prices over the next few years.
In June, a survey of 4,000 Californians found that only one out of three people visiting new housing tracts across the state considered themselves serious buyers. Only 15% said they still viewed purchasing a home as an investment instead of merely a shelter from the elements.
“I hope the results (of the latest survey) are accurate, but some are the exact opposite of what I’m hearing from people,” said David Dale-Johnson, director of the real estate program at USC.
“Most people still seem bearish on real estate, and I don’t see things really turning around until the layoffs are over and the economy improves,” he said.
Antoci said a sudden upturn in rates could be just the bitter medicine needed to reinvigorate the state’s housing market.
“I don’t think anyone wants to see rates suddenly jump up, but it could get the market moving again by nudging the fence-sitters into action,” he said.
A Good Time to Buy
A poll of 1,004 Californians conducted by research firm Yankelovich Partners Inc. found that the majority of the respondents said that this is the best time to buy a home in recent memory; that California home prices have hit bottom, and that home buying makes more financial sense than renting. But the poor economic outlook is keeping potential buyers on the sidelines.
* Do you think this is generally a good time or a bad time to buy a house in the area where you live in California? Bad time: 28% Good time: 66% Not sure: 6%
* Do you think owning a home California today is a good financial investment? Not a good financial investment: 32% Good financial investment: 64% Not sure: 4%
* Would you describe economic conditions in California today as being very good, fairly good, poor or very poor? Very good: 4% Fairly good: 20% Poor: 48% Very poor: 25%
* Do you think home values in the area where you live will increase in the next few years, go down or stay about where they are now? Stay the same: 41% Increase: 39% Go down: 15% Not sure: 5%
Source: Yankelovich Partners Inc.
