Home buyers are confident that housing is a solid investment, according to an informal Inman News survey. About 74 percent of respondents said home buyers are confident, while 4 percent said they are not confident and 22 percent said buyers are uncertain whether housing is a good investment.

One respondent, a real estate broker, said experienced buyers are taking a cautious approach to the housing market. “Many of my more seasoned buyers and investors believe the Southern California residential and apartment markets are overpriced; 30-40 percent corrections are expected by many,” the broker said.

Another survey participant said some home buyers are putting their down payment in CDs or mutual funds and waiting out the housing boom for several months. “They feel the 6 percent return on that $50,000 is better than overpaying for something they’re not in love with,” the participant said.

And another respondent said, “When any investment area goes up very fast, it gives buyers false hopes. There is no guarantee that you will make a profit. Most people don’t realize that. As interest rates rise, each $100,000 borrowed costs an extra $100 per month. I know that when a bank is willing to issue a $400,000 mortgage to a buyer with three dependants and an annual salary of $90,000 per year (one income), something is wrong.”

While most survey participants said home buyer confidence is still high that housing is a good investment, a real estate research firm handed down a grade of “C-” for consumer confidence in the month of May. This grade, by Meyers Group in Costa Mesa, Calif., is based on the Conference Board’s Consumer Confidence Index, a monthly measure of the public’s confidence in the health of the U.S. economy.

“Overall, consumers are still optimistic about future prospects for the economy, but despite two months of strong job growth, appear to be remaining a bit less exuberant than during the premature jump in the index at the end of 2003 and in January of 2004,” the Meyers Group announced.

Also, the Meyers Group reported that consumer plans to purchase a home in the next six months rose 3.8 percent despite increasing mortgage rates, and the portion of those consumers planning to purchase a new home increased to 1.2 percent. Meanwhile, the percentage of consumers planning to purchase an existing home dropped from 2 percent to 1.6 percent, according to the Meyers Group.


Send tips or a Letter to the Editor to glenn@inman.com or call (510) 658-9252, ext. 137.

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