Consumer optimism may bump into housing market reality
More than half of U.S. consumers expect home prices in their local market to return to their bubble-era highs within the next 10 years, according to the latest American Dream survey from real estate search and marketing site Trulia.
Home prices rose in 86 of the nation’s 100 largest metro areas in the three months ending in May, rising 1.6 percent overall nationally compared to the previous three-month period, Trulia said.
Not surprisingly then, 61 percent of respondents expected local home prices to increase within the next year. But nearly as many – 58 percent – anticipated local prices to reach their pre-bust peaks within the next decade.
While renewed optimism is a plus for the housing market, “the pendulum may have swung a little too far,” said Jed Kolko, Trulia’s chief economist, in a statement.
“Most people in markets that had the biggest price bubbles – like Las Vegas, Sacramento, and Detroit – expect local home prices to get back up to their previous highs in the next decade,” Kolko said. “Although optimism helps the housing recovery, this much optimism about house prices could put us right back on the path to the next housing bubble.”
Consumers are not only dreaming of bigger prices on the horizon, but bigger homes as well, the survey found. While consumers seemed to lose some of their taste for McMansions during the housing downturn in favor of smaller homes, more than a quarter of respondents (27 percent) said they would prefer homes more than 2,600 square feet, including 11 percent whose ideal home size was more than 3,200 square feet, Trulia found…
Read the rest of this article by Trulia here: “Consumer optimism may bump into housing market reality“.