10Jan2014
Dan Green
Author
Dan Green
Filed Under
Mortgage Market Headlines

Amid Rising Mortgage Rates And Home Prices, 67% Believe Now Is “A Good Time To Buy”

Mortgage rates and markets change constantly. Stay 100% current by taking The Mortgage Reports by email each day. Click here to get free email alerts, or subscribe to the RSS feed in your browser.

Fannie Mae survey shows that U.S. consumers believe it's a good time to buy a home

According to a Fannie Mae survey, just 9% of U.S. consumers believe home prices will drop between now and 2015; with an average expectation that values will rise more than 3 percent nationwide.

The survey is the latest in a series of signals signaling a shift in consumer attitudes.

See what today's mortgage rates look like.

Two-Thirds Say "It's A Good Time To Buy"

Each month, Fannie Mae conducts a National Housing Survey. The agency speaks with 1,000 households nationwide about the state of the U.S. housing market.

Survey results from December show consumers overwhelmingly bullish on the future of housing with 67% of those surveyed said now is "a good time to buy a home".

It's easy to understand why respondents are optimistic. As compared to one year ago, home values in many U.S. cities are up ten percentage points or more versus last year, with some areas seeing growth of 20% or more.

The housing market's recovery has been national news.

Hard-hit cities during last decade's downturn have led this decade's rebound. Phoenix, Arizona and San Francisco, California are two notable markets in which single-family home values have climbed twenty-plus percent. Condos are faring even better.

A sampling of recent statistics demonstrates how much U.S. housing has improved.

  • Existing home supply is at just 5.1 months nationwide
  • New Home Sales are up 17% annually
  • Homebuilder confidence is at a 7-year high

Furthermore, mortgage rates remain low.

Fewer U.S. homeowners are underwater on their homes and 33% believe now is "a good time to sell" their home, up from the low-20s one year ago.

See what today's mortgage rates look like.

Just 4% Expect Mortgage Rates To Drop

Among the questions asked in the December 2013 Fannie Mae Housing Survey was "Do you expect mortgage rates to go up, go down, or stay the same in the next 12 months?"

Just 4 percent of those surveyed expect mortgage rates to drop. This may be another reason why such a large percentage of respondents said "now is a good time to buy a home".

When mortgage rates rise, buyers can afford "less home" and, for every 1 percentage point increase above today's rates go, a buyer's maximum purchase price declines 11%.

Rising mortgages rates, therefore, often mean the difference between buying a 4-bedroom home or three-bedroom home; with 3-bathroom home or a two-bathroom one. In many markets, rising mortgage rates can mean the difference between living in a top-rated school district or a second-tier one.

Rising rates may hurt more than usual this year, though, because renting is getting more costly.

Thankfully, low- and no-downpayment mortgage programs such as the USDA 100% mortgage program, the FHA 96.5% mortgage, and the no-downpayment mortgage for military borrowers are readily available.

It may be more costly to own a home in 2014, but buyers can expect to put very little down, if needed.

Buying In 2014? See How Much You Can Afford.

For today's home buyers, an improving economy helping to raise home prices and U.S. mortgage rates, both of which contribute to rising homeownership costs.

Part of planning for your future home purchase is to get today's rates, and to know how much home you can actually afford. Get today's rates now and consider a free, no-obligation pre-approval. It helps to get a bank's opinion.

See  today's mortgage rates look like.

About the Author

Dan Green is a mortgage market expert, providing over 10 years of direct-to-consumer advice. NMLS #1019791. You can also connect with Dan on Twitter and on Google+.

The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products. The views and opinions expressed herein are those of the respective authors and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.