The Housing Market in Retrospect

The National Association of Realtors recently produced a Market Pulse Survey that provides insight on consumers’ needs in retrospect from 2003 to 2011. Looking at consumers’ needs and their accompanying behaviors can be beneficial in understanding future market conditions.

Kathy Gyselinck is Executive Vice President for Southeast Mortgage

Kathy Gyselinck is Executive Vice President for Southeast Mortgage

To produce the report, data was gathered through a telephone survey of 1,000 urban and suburban adults in the top 25 media markets. This data juxtaposed market trends and conditions alongside consumers’ perceptions on topics such as affordability and buying confidence.

While consumers’ perceptions of the market varied dramatically over the nine-year period that overlapped the housing market’s fall and the economic recession that followed, their perceptions are interesting to note.

First, the survey reported consumer concern about affordability eased steadily after the housing peak in 2005 – when 51 percent of respondents indicated that housing affordability was a “very big” or “fairly big” problem. Home prices and mortgage rates continued to decline from 2007 to 2011 and eventually led to a better perception. In 2011, only 38 percent of respondents thought housing affordability was a problem.

These numbers coincided with NAR’s affordable housing index. From 2003 to 2011, NAR’s housing affordability index rose 60 percent.

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Graph taken from report by National Association of Realtors

While housing was becoming more affordable, consumers were becoming less confident. The report states from 2007 to 2011, there was a steady decrease in survey participants who thought buying a home was a good financial decision – decreasing from 80 percent to 73 percent.

The declining prices and genuine uncertainty about the market over that time period contributed to consumers’ questioning of investing in a home; however, consumers did not fail to realize unfavorable market conditions actually provide favorable buying options.

Graph taken from report by National Association Realtors

Graph taken from report by National Association Realtors

When asked during the time period of 2007 to 2011, an overwhelming majority of consumers thought it was a good time to buy. In 2007, 46 percent of consumers agreed it was a good time to buy and then, by 2011, that number rose to 57 percent of consumers in agreement.

It will be interesting to see if consumer perceptions continue to rise now that the housing market has surfaced out of its darker period over the past decade. Home prices and mortgage rates are still low so it is still a good time to buy. This survey indicates consumers separated “a good time to buy” from “a good financial decision” from 2005 to 2011. With the market gaining speed, those two perceptions may cross paths soon.

View The National Association of Realtors’ report for more information on the survey.

- Kathy Gyselinck,  Executive Vice President for Southeast Mortgage

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