Predicting the future of housing prices can be as tricky as asking a Magic 8 ball. Ask the toy whether housing prices will rise in the next 12 months and the response is most likely to be “You may rely on it.” And according to a Gallop poll, 61 percent of Americans would agree.
This year’s poll offers the most optimism since Gallop first started posing the question in 2005, when 70 percent of Americans thought housing prices would rise. The figure also is 6 percentage points higher than 2015, according to UPI.
Interestingly, public opinion has largely trended along with what has actually happened with home prices over the last decade.
In a statement, Gallup’s Jeffrey M. Jones said the continued increase in housing prices leads to questions of whether another housing bubble could occur.
“While prices now are nearly where they were a decade ago, houses are more affordable because of lower interest rates, and banks are more reluctant to issue risky mortgages than they were before the mid-2000s housing market crash,” he added. “Still, if housing prices continue to rise and interest rates increase, the potential for a new housing bubble will grow.”
Americans still have faith in the housing market, with 67 percent responding that it is a good time to buy a house. Positive sentiment is down slightly from 2012 to 2014, when 74 percent of respondents said it was a good time to pull the trigger on a home purchase.
According to Frank Martell, president and CEO of CoreLogic, home prices have been on the rise in 2017 and he said these these gains are likely to continue well into the future.
“Home prices are at peak levels in many major markets and the appreciation is being driven by a number of dynamics — high demand, stronger employment, lean supplies and affordability —that will continue to play out in the coming years,” he said. “The CoreLogic Home Price Index is projecting an additional 5 percent rise in home prices nationally over the next 12 months.”
The National Association of Realtors also support the current trend, noting that home sales prices continue to increase. Lawrence Yun, NAR chief economist, pointed out recently that existing home sales continue to post strong gains, including in the Northeast and Midwest.
“Although finding available properties to buy continues to be a strenuous task for many buyers, there was enough of a monthly increase in listings in March for sales to muster a strong gain,” he said in a statement. “Sales will go up as long as inventory does.”
Yun also pointed out that strong consumer confidence and an uptick in demand continues to drive growth in home sales in all major regions even as prices rise.
Yun added that price gains witnessed in March and the short time a home was on the market are a direct result of the homebuilding industry’s struggle to meet the growing need for more new homes.
“A growing pool of all types of buyers is competing for the lackluster amount of existing homes on the market,” he said. “Until we see significant and sustained multi-month increases in housing starts, prices will continue to far outpace incomes and put pressure on those trying to buy.”
For real estate professionals, the price trends in housing are clear and no Magic 8 ball is necessary. It promises to be a summer of increasing demand and rising housing prices.