Rents, Home Prices Expected to Rise

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Americans increasingly expect home prices and rents to increase over the next 12 months, a trend that could push more of them toward home ownership, according to a new survey by Fannie Mae.

"Conditions are coming together to encourage people to want to buy homes," said Doug Duncan, Fannie Mae chief economist. "Americans' rental price expectations for the next year continue to rise, reaching their record high level for our survey this month. 

 

"With an increasing share of consumers expecting higher mortgage rates and home prices over the next 12 months, some may feel that renting is becoming more costly and that homeownership is a more compelling housing choice," Duncan said.

 

Nearly half of all consumers expect rents to increase over the next year, according to Fannie Mae's March National Housing Survey, released today. Fully one-third expect home prices to rise over the same period, a five percent increase over February's levels and the highest level reported in a year.

 

Consumers more optimistic about own finances

 

Meanwhile, consumers' views of their own finances have been improving over the past three months, with 44 percent now saying they expect their own financial situation to get better over the coming year.

 

On average, Americans surveyed in March said they expect home prices to increase by 0.9 percent over the next year, with rents anticipated to go up by 4.1 percent. Meanwhile, 40 percent said they expect mortgage rates to rise over the next 12 months, a 5 percent increase over February's level.

 

Nearly three-quarters of those surveyed, 73 percent, said they think it's a good time to buy a home, a modest increase from the previous month. At the same time, significantly more tend to have a pessimistic outlook about the economy rather than a favorable one, with 58 percent saying the economy is on the wrong track versus 35 percent who say it is on the right track, attitudes that will likely have to change significantly before the housing market shows a strong rebound.

 

 



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Personal Finance , Real Estate

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