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|Source:||Insurance Weekly News|
The expiration of the 2010 Home Buyer Tax Credits on April 30 are unlikely to put off Americans looking to purchase homes who believe now is a good time to buy and are confident that home prices will rise according to a survey released by Prudential Real Estate and Relocation Services, Inc., a Prudential Financial, Inc. [NYSE: PRU] company. The survey of 1,000 Americans between the ages of 25-64 with at least $35,000 household income was conducted during April 15-20, 2010.
More than 90 percent of consumers believe that the home buyer tax credits have helped both first-time home buyers and the U.S. housing market overall. Among consumers actually shopping for homes, 65 percent believe that the end of the tax credits will have little or no effect on their interest in purchasing a home.
While consumers remain unsure about the direction of the housing market, the survey reveals that they are optimistic about real estate values with 46 percent of consumers expecting real estate prices in their area to increase over the next year. Just 12 percent expect prices will decline. Over the next five years, 79 percent expect real estate prices to increase, with 20 percent expecting that prices will increase substantially.
“The survey underscores the key role the federal home buyer tax credits played in stimulating residential real estate market activity and the U.S. economy,” said James Mallozzi, chairman and chief executive officer of Prudential Real Estate and Relocation Services, Inc. “It also shows that most consumers believe the market has hit bottom and are more optimistic about the future.”
Survey respondents identified concerns about rising mortgage interest rates and unemployment as the most important factors affecting their decision to purchase a home, along with more stringent lending criteria and fewer mortgage-backed securities purchased by the Federal Reserve. The expiration of the tax credits placed lowest on their list of concerns. Among those who have recently purchased a home, 61 percent cited low mortgage interest rates as “very important” to their decisions – an amount greater than either the tax credit or even cheaper prices. The 66 percent expecting interest rates to rise underscores potential headwinds for the market.
“The tax credits clearly helped stimulate the market when consumer confidence was low and housing inventory was high,” said Earl Lee, president, Prudential Real Estate and Relocation Services, Inc. “While the tax credit expiration is a concern for many, the bigger issues now are the availability and cost of financing as well as if they will have a job.”
Despite the significant downturn in the real estate market, the survey underscores that the dream of home ownership and the perception that owning a home is a good investment remain intact. Among current renters, 75 percent still believe owning their home is a better long-term choice for their needs than renting. The majority of consumers also believe that homeownership is a better investment than individual stocks or bonds (75%), mutual funds (72%), or savings accounts (74%).
“The real estate market is precariously balanced. Consumers are clearly motivated to take advantage of the opportunities the current low interest rates and prices afford,” Lee notes. “While the market is picking up in terms of sales and confidence, and the majority still believe that owning a home is a good investment, the outlook for the market remains highly dependent upon the direction of the economy overall.”
The Prudential Real Estate Outlook Survey was conducted online. The margin of error is+/- 3 percent. A more detailed breakdown of the data is available, as well as supporting charts and visuals, at www.news.prudential.com.
Prudential Real Estate and Relocation Services, Inc. is Prudential’s integrated real estate brokerage franchise and relocation services business. Prudential Real Estate franchises are independently owned and operated. Companies are selected based upon outstanding performance records, high levels of customer service and shared business values with those of Prudential. Prudential Real Estate is one of the largest real estate brokerage franchise networks in North America, with nearly 1,700 franchise offices and approximately 60,000 sales professionals in the franchise Network as of Dec. 31, 2009.
Prudential Financial, Inc. (NYSE: PRU), a financial services leader with approximately $667 billion of assets under management as of Dec. 31, 2009, has operations in the United States, Asia, Europe, and Latin America. Leveraging its heritage of life insurance and asset management expertise, Prudential is focused on helping individual and institutional customers grow and protect their wealth. In the U.S., the company’s Rock symbol is an icon of strength, stability, expertise and innovation that has stood the test of time. Prudential’s businesses offer a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management, and real estate services. For more information, please visit www.news.prudential.com.