About 63 percent of surveyed investors expect economic conditions in the U.S. residential real estate market to worsen over the next year, and 32 percent said they believe that home prices will decline in that time, according to the latest UBS/Gallup Index of Investor Optimism.
Overall, investor optimism hit a low point for the year in June at 58, according to the survey results, which is down six points from the May reading and represents a decline of 35 points since the start of the year. The index is conducted monthly and had a baseline score of 124 when it was established in October 1996.
About 35 percent of investors said they expect home prices to increase in the next year, while 32 percent expect prices to remain unchanged.
About 45 percent of investors rate conditions in the real estate market as good, while 5 percent rate the conditions as excellent.
About 39 percent said conditions in their local community’s residential real estate market are good, while 17 percent rated conditions as excellent, 30 percent rated them as “only fair,” and 13 percent rated them as “poor.” About 46 percent of investors stated that conditions in their local community’s residential real estate market are getting better compared, while 48 percent said they are getting worse.
Sixty-four percent of investors stated that now is a good time to buy a home in their local community, while 55 percent said it is a good time to invest in real estate and/or real estate-related assets nationwide.
This 98th index was conducted from June 1 to June 15. Dennis J. Jacobe, research director for Gallup, said in a statement that the sampling included 802 investors randomly selected from across the country. For the purposes of the index, an investor is defined as any person who is head of a household or a spouse in any household with total savings and investments of $10,000 or more. About 40 percent of American households have at least this amount in savings and investments. The sampling error in the results is plus or minus 4 percentage points, according to the announcement.
About 52 percent of investors said they believe that the current level of interest rates is harmful to the U.S. investment climate — an increase of five points over last month. “Investors are clearly concerned about upcoming moves by the Federal Reserve, with six in 10 investors fearing that the Fed will increase interest rates ‘too much, too fast,’ leading to a possible recession,” according to the survey.
About 34 percent stated that they believe Federal Reserve Chairman Ben Bernanke is doing a good job or an excellent job, while 39 percent rate his performance as “only fair,” 4 percent rate it as “poor,” and 23 percent have no opinion, according the survey results.
Sentiment about the state of the U.S. economy has changed dramatically since January, UBS reported. This month, 50 percent of investors surveyed said that they believe the economy is in a slowdown, compared with 31 percent of respondents in January. Among the issues that investors believe are harmful to the U.S. investment climate are energy prices, 94 percent; the Federal budget deficit, 79 percent; and inflation, 72 percent.
Last month, 23 percent of investors were pessimistic about stock market performance; this month that number has risen to 32 percent, the survey also revealed. The percentage of respondents who believe that now is a good time to invest in the stock market declined to 55 percent in June from 60 percent in May.
UBS is a global financial firm that offers investment banking and securities services, wealth management and global asset management.