Although the housing sector has not really regained its balance after the recession left borrowers struggling to keep their heads above water, Americans still appear to view buying a house as an essential expense. But the volatility in the market has taken its toll and potential home owners and investors are using extreme caution when actually finalizing a home deal.
The latest housing survey by Fannie Mae revealed that up to two-thirds of Americans still show interest in owning homes. According to the nationwide survey, 65% of homeowners and tenants also believe that home buying is a worthwhile investment and expect home values to rise in the near future.
The Fannie Mae report mentioned that the housing segment has failed to move up in line with expectations during the previous two months following the extension of incentive programs like home buyer tax credits. The reason for this is thought to be the saturation of the target pool. Most eligible home buyers who could have bought a house are believed to have taken advantage of the first time home buyer credit program as soon as it was launched. Once the initial phase concluded, the extension has failed to find enough qualifying buyers, which is the reason for its below expectations performance.
The second phase of the program also covered repeat home buyers but the amount of credit offered was lower which made it less attractive. Owing to all these factors, the surge expected in the sector never materialized. In fact, Fannie Mae expects a further drop in the current quarter.
There is some good news though. The confidence level of consumers is on the rise as shown by increased spending. This will boost activity in all sectors of the economy including housing. According to Fannie Mae, this spending may be tempered with caution when it comes to home purchases, as potential home buyers had lost much of their risk appetite given the roller coaster ride that the sector has gone through over the past few years.
The preference may now shift to buying homes for the long term with the primary purpose of using it as residence rather then for investment. Convenience, safety and accessibility to markets and schools will drive the value of homes in the near future. The housing market will also be subjected to much more scrutiny from now on so that proactive measures can be taken to prevent a similar crash from hurting the sector.