About 88 percent of Americans responding to a survey of their home-buying plans for 2004 said they don’t plan to buy this year, global marketing research firm Ipsos-Insight reported.
That leaves 12 percent of respondents who said they will purchase a house this year. Nearly half of them will be first-time buyers.
Although there are more people who will not buy homes than those who will buy, experts at Ipsos-Insight believe the numbers refute the idea that the housing market boom will bust in 2004. Many consumers are still planning to buy homes, take out home equity loans or refinance, despite predictions that home sales will decline this year.
“While most experts have predicted 2004 home sales will drop off from the all-time record sales seen in 2003, consumer intentions seem to indicate that if there is in fact a sales decrease, it may only be a slight decline,” Ipsos-Insight SVP Greg Mahon said.
But some experts are convinced the housing boom is indeed a bubble waiting to burst. The Center for Economic Policy and Research, for instance, has been claiming evidence of a housing bubble for some time.
The CEPR challenged anyone to change its mind by sponsoring an essay contest on “Why there is no housing bubble,” or in other words, prove its experts wrong. The contest is open until the end of this month and the winner of the most convincing essay will receive $1,000.
The Ipsos-Insight survey asked 1,001 Americans about their home buying plans for 2004. Of the 12 percent of the Ipsos-Insight survey respondents who said they would buy a home this year, 43 percent plan to purchase a newly constructed home and 57 percent plan to buy an existing home.
Survey respondents who already own homes and don’t plan to buy this year still plan to take advantage of low interest rates. Seven percent of respondents said they intend to take out a home equity loan or home equity line of credit.
More than one-third of the respondents had refinanced their home and an additional 9 percent plan to refinance this year.
“Our findings indicate that there is still tremendous opportunity, so long as interest rates don’t rise substantially,” said Mahon. “Currently, all indications seem to suggest that rates will remain stagnant for the next six months, which portends favorably for consumers, financial services companies and the U.S. economy.”
The National Association of Realtors and the National Association of Home Builders forecasts also refute the bubble theory.
NAR expects 5.9 million homes will change hands this year, down from 6.1 million last year. NAHB predicts 1.01 million new homes sales year, down from 1.09 million last year. While many factors indicate sales will soften from last year’s record pace, NAHB Chief Economist David Seiders said in a previous interview that the possibility of this year’s sales topping last year’s numbers still exists.
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