You may have thought the housing market was slowing, although if you did, your feelings on the housing market differ from wealthy Americans. RISMedia reports that a survey released by PNC Financial Services Group showed that wealthy Americans expect their homes to appreciate in value over the coming years. Fewer than one in 10 expect any decline in value. Floridians are the most bullish on the housing market, while New York and California respondents showed to be more bearish. Perhaps the housing slowdown is a myth? Could be, as seasonal slowdowns aren’t unusual. Here’s more of what the PNC survey found:
Sixty-five percent of those surveyed said they expect to see double-digit increases in the value of their primary homes over the next five years, with nearly one-third (31 percent) anticipating an increase of 20 percent or more.
“Our findings indicate that many among the wealthy will not believe there is a real estate slowdown until they see it reflected in their property values, especially in regions of the country where prices have skyrocketed during the past five years,” said Nicholas Buss, Ph.D., senior vice president and PNC’s real estate economist.
He added: “As an investment, real estate has been an increasingly dominant asset class over the past five years. The party may be over for those who have been ‘flipping’ houses and using real estate to get rich quick. But, in general, established wealthy Americans have not been speculative buyers and they remain solidly confident in the long-term value of their real estate holdings.”
In other real estate news, housing starts increased to 5.23 percent in November, 17.5 percent higher than thy were in November of last year. Single-family housing starts were up by 4.88 percent, 7.5 percent higher than this time last year. Building permits increased by 2.5 percent. Here’s more from our friends at RIS Media:
“The housing market still is fundamentally healthy,” said Dave Wilson, president of the National Association of Home Builders (NAHB) and a custom home builder from Ketchum, Idaho.
“Many builders sense some tapering off of buyer demand because of resistance to high prices and rising interest rates, as reflected in our recent housing market index survey of builders, and many companies have begun offering certain incentives in order to maintain their sales and production.”
“Measures of housing affordability have deteriorated in recent months, but economic fundamentals are still quite solid,” said NAHB Chief Economist David Seiders. “2005 will be a record year for single-family housing and the second best year for total housing starts, exceeded only in 1972 when multifamily production surged.”
Here’s the overall national housing outlook from NAR’s chief economist David Lereah, courtesy of Inc.:
David Lereah, chief economist at the National Association of Realtors, expects home sales next year to be the second-best in history. He called the recent slowdown a “tapping of the brakes” on a red-hot market. “Home sales are coming down from the mountain peak, but they will level-out at a high plateau,” Lereah said in a statement Monday, describing the downturn as a healthy transition to a “more normal and balanced market.”
At the same time, mortgage rates are creeping up. The NAR expects 30-year fixed-rate mortgages to climb upwards, reaching 6.6% by the second half of 2006, as new-home sales drop by 4.8% to 1.23 million.
Here in the Tampa-Clearwater-St. Petersburg region of Florida, expect a robust housing market in 2006. While there may be more inventory for buyers to choose from, that does not suggest less demand; it suggests that a large number of sellers decided to try cashing out. Housing appreciation will be more normal in 2006 than it has been during the last two years. Sellers who ask too much for their homes, condos or other properties will be hard-pressed to get it in a normalized market, and those listings will sit. Smart pricing and aggressive marketing, though, will move any property that’s for sale into a buyer’s hands.
In other areas of the country, such as New York and California, I foresee a slower market in 2006. In Texas I see a hotter market, as Californians cash-out and relocate there. Many New York residents will seek sun, lower taxes and a lack of mass-transit strikes here in beautiful, sunny Florida, where housing is cheaper, taxes are lower and where unions aren’t a problem (it’s a “right to work” state). Rising rates will likely encourage more purchases, as buyers seek to lock-in a lower rate before higher ones take effect. However, any sharp interest rate increases will definitely affect the overall housing market, as will sharp rises in oil/gasoline prices. Lower oil/gasoline prices will benefit the overall market, as will a strong economy. Buyers will likely have more negotiating leverage due to higher market inventory in some markets. For more real estate news and information, visit my blog.