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U.S. adults are more pessimistic about the housing market than during the 2007-2008 financial crisis and housing bubble. Results from a Gallup poll indicate only 21% of respondents – a new low — say it is a good time to buy a house.
Last year, 30% believed it was a good time to buy a home. Jeffrey M. Jones, senior editor at Gallup, noted the 2022 and 2023 results are the only times less than half of Americans have perceived the housing market as being good for buyers.
Gallup started measuring home buying sentiments in 1978 as part of its annual Economy and Personal Finance poll. At that time, 53% thought it was a good time to buy. Optimism peaked in 2003, reaching a record high of 81%, which notably was a time of growing homeownership rates and housing prices.
Optimism hit 74% in 2014, but then started dwindling. It dipped to 50% in 2020 in the early stages of the coronavirus pandemic when economic activity was curtailed in many parts of the U.S. There was a slight bounce up to 53% in 2021 when average 30-year mortgage rates fell below 3%.
In reporting its findings, Gallup suggested Americans’ pessimism about homebuying reflects the high prices and high interest rates “that are conspiring to make mortgage payments less affordable,” adding “These attitudes may keep many prospective homebuyers out of the market.”
Gallup’s report indicated Americans still regard real estate as the best long-term investment, better than stocks, gold and other options.
In recapping the findings of the latest measurement of homebuyer sentiment, Jones wrote “Opinions of the housing market are bleak and generally similar among all major subgroups, including by region, urbanity, homeownership status, income, education and party identification. Subgroups in these categories range from 18% to 24% thinking it is a good time to buy a house.”
Gallup also monitors perceptions of housing prices by asking survey participants if they think average prices of houses in their area will increase, stay the same or decrease.
Last year, seven in 10 respondents (70%) expected prices to increase. In 2021, slightly more — 71% — thought prices would rise. That marked the highest percentage holding that view in Gallup’s survey or price expectations dating back to 2005.
As prices have started falling during first quarter of 2023, fewer Americans expect values in their area to rise in the coming year. Gallup found 56% still expect increases, with 25% thinking they will stay the same and 19% believing prices will decline.
Perceptions about the direction of prices varied by region.
Midwestern residents are less likely than their counterparts elsewhere in the country to predict prices will increase over the next year. Less than half (45%) of Midwesterners predicted higher prices. That compares to 55% of Western residents, 61% of Southern residents and 62% of Eastern residents who expect rising prices.
Gallup also found differences when comparing rural, suburban and city residents. Nearly two-thirds of city dwellers (64%) and 57% of suburban residents expect prices to increase. Only 45% of those who live in towns or rural areas think values will rise.
Gallup conducted the survey from April 3-25. Respondents included adults ages 18+ living in all 50 states and the District of Columbia. The global analytics and advice firm has been collecting data for more than 80 years.
(Permission to republish graphics granted by Justin McCarthy, journalist/analyst at Gallup, 5/24/2023)