Homeowners Are Optimistic About Housing

(Although home sales are down, right along with the prices, it seems as though a surprisingly large majority of homeowners are optimistic about the outlook of the housing market. )

Despite all of the doom and gloom forecasts about the housing market, a new study suggests that home owners are not really worried about all of the stuff they are reading about in the newspaper.

A November 8, 2006 article by Andrea Coombes of MarketWatch and posted in The Wall Street Journal's Real Estate Journal, "In face of housing slowdown, homeowners remain optimistic," discusses the results of a new survey that shows the positive outlook of homeowners all across the nation.

"Homeowners are either remarkably stable people with their financial houses in order or they've got their heads in the sand. Despite news of late that the housing market is slipping, just 6% of homeowners in a survey in August said they think their home's value will decline in the next 12 months."

"Ten percent expect their home's value to increase a lot in that time, 53% expect it to increase a little and 27% expect it to stay the same. Another 4% weren't sure where home values would go, according to the survey of 1,361 homeowners nationwide conducted for Wells Fargo and released Monday."

This positive attitude that a seemingly large majority of homeowners have may either be blind optimism, or a true look into how the market could be well on its way to correcting itself in the very near future.

After all, most reports concerning the housing market in the past few months are not really even remotely optimistic. The National Association of Homebuilders just announced that U.S. home builders have cut prices at the fastest pace in 36 years. And most economists and analysts do not seem to be optimistic about the market either.

But homeowners don't seem to be hearing all of this negativity, and are still reporting positive outlooks.

"'If people are planning to stay in their home for more than the next 12 to 18 months, I don't think they're feeling the nervousness,' said Doreen Woo Ho, president of Wells Fargo's consumer credit group. 'It's always the people who are facing the issue to sell -- they're moving, they may have some other changes in their life, divorce -- those things cause more anxiety around home values,' she said. Plus, many homeowners are likely still enjoying recent gains."

Part of this optimism concerning the housing market may be attributed to the fact that most people view their homes as a valuable asset. Before, many viewed their homes as a liability, just a huge mortgage they had to pay off.

"Homeowners these days see their home as a valuable asset, with 72% of those surveyed saying their home equity is their most important investment. That's a perception that's emerged in recent years, Woo Ho said."

The only homeowners that seemed a little concerned were those with ARMs, because many of these types of mortgages are posed to "reset" soon, leaving many borrowers with much higher monthly mortgage payments.

"While homeowners overall are optimistic about the housing market, those with adjustable-rate mortgages -- 14% of those surveyed had an ARM as their primary mortgage -- did express concern: 79% of homeowners with an ARM said they're worried about rising interest rates."

"Still, while a good portion of these homeowners expressed concern, 21% said they will not take any action when their rate adjusts. Of those who do plan to take action, most say they will refinance."

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