Consumers Confident in Housing Despite Media

Households say their decisions about buying are based on personal matters without much regard to market news.
By Camilla McLaughlin for REALTOR® Magazine Online
Although real estate is receiving more coverage than ever — often negative — a recent survey shows that real estate headlines actually influence only a small percentage of home owners.

Not only do Americans remain highly confident about the nation’s housing prospects, a majority also say their decisions regarding a purchase is based on factors such a price or personal motivations.

A survey of 2,000 homeowners conducted by the National Association of Homebuilders shows that more than four out of five home owners expect the value of their home to appreciate over the next five years and nearly seven out of 10 call a home their most valuable investment.

Only 13 percent felt their home would fall in value, while 4 percent expected no change. Fully 81 percent of home owners surveyed believe the value of their homes will rise over the next five years.

“Although the majority of the households we polled indicated that they found the media a reliable source of information on the housing market, what they read in the newspaper, saw on television, or heard on the radio was no substitute for actually shopping the market,” said Thomas Riehle, a partner in RT Strategies, which conducted the research for NAHB.

Marginal Influence

When asked about the influence of the news media on their decisions of when to buy a home, only 19 percent of the respondents said it played an important role; 23 percent indicated that it had some importance on their decision; and 7 percent said it played a minor role. A full 48 percent said it had no influence whatsoever.

Sixty-one percent of the survey participants rated the media as “sometimes trustworthy” as a source of information on the housing market; 5 percent said that it’s “always trustworthy.” Twenty percent said it’s “seldom trustworthy”; 8 percent said it’s "seldom trustworthy.”

Personal Motivations

Rather than media assessments of the market, personal considerations guide purchase decisions. "When people are actually thinking about buying a home, they’re driven by the details of how it’ll impact their family budget and lifestyle and contribute to their long-term wealth, and that gives them a much closer perspective on the market than what can be conveyed in news coverage," he says.

When asked to rate the importance of factors that might affect their decision to purchase a specific home, 80 percent said price was the most significant factor. Other considerations included:

    • Potential for the new home to appreciate in value, 71 percent
    • The prospect of selling their current home at a fair price, 70 percent
    • The level of mortgage interest rates, 69 percent
    • Personal life changes 60 percent

The NATIONAL ASSOCIATION OF REALTORS®, too, is touting historically low interest rates as a good reason to buy in an ad campaign it ran in November in The Wall Street Journal, USA Today, and The New York Times, among other major national newspapers.

“Right now may actually be one of the best times to buy a home,” says the campaign, which includes an extensive broadcast component.

Unlike in past periods of cooler sales, NAR says, the national economy is solid, interest rates remain historically low, jobs are being created, demographic trends point to continued strong housing demand, and there’s plenty of inventory for buyers to choose from.