When you’re in the middle of an investment mania it’s hard to imagine things ever being any different. A couple of years ago a number of Americans thought investing in real estate in cities like Las Vegas, Miami or San Diego was a great idea – if the market stopped going up it would simply stop appreciating as quickly, prices would never go down.
Well after two years of lower sales and slowly dropping prices pessimism has started to overtake the US housing market with a growing majority showing no interest in buying a home anytime soon:
In a vivid sketch of how the sputtering real estate market is causing distress throughout the country, the Associated Press-AOL Money & Finance poll found that more than a quarter of homeowners worry their home will lose value over the next two years. Fully one in seven mortgage holders fear they won’t be able to make their monthly payments on time over the next six months.
“This is a great time to buy, but not necessarily to sell,” said Robert Jackson, who lives in a two-bedroom house in Ferguson, Mo., with his wife and four young children. He said he would love to purchase a larger home, but can’t because even if he found a buyer, he would probably lose thousands on his house, which he bought less than two years ago.
Sixty percent said they definitely won’t buy a home in the next two years, up from 53 percent who said so in an AP-AOL poll in September 2006. At the same time, just 11 percent are certain or very likely to buy soon, down from 15 percent two years ago.
The growing reluctance to dip into the housing market seems to stem partly from worry that housing prices will continue falling — good if you’re buying a house but bad if you have to sell one.
The number envisioning falling prices in their area has grown to one in four, while four in 10 think prices will rise, a decrease from two years ago. Expectations for rising prices are highest in the South, with Westerners likeliest to predict they will drop.
Underscoring the public’s unsettled feelings, the number saying local housing prices are about right has fallen to 35 percent. Half say homes are overpriced — especially in the Northeast — while those saying housing is underpriced have doubled to one in 10, particularly Midwesterners.
Here in Vancouver with our run-up in house prices it’s hard to imagine the majority of residents having an overall negative outlook on investing in local real estate, but it’s happened here before and I wouldn’t be surprised to see it happen again when the market corrects.