The Confidence Factor

Posted on by smi

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By: Betty Smith

The recovery of the American economy is the load residential real estate must carry. For the economy to return to normal, residential real estate needs to be healthy.

What does healthy mean? Simply put, real estate must appreciate once again. The good news is that it is doing just that in most parts of the country. Consumer confidence is tied to both home values and the condition of the stock market. One or the other can somewhat rule the day; but a healthy economy is predicated on both being stable.

Home prices nationally could rise by 7.2 percent, according to JP Morgan.  Cash-sale transactions are approaching 30 percent nationally; but for the most part, that activity is limited to the major markets on the east and west coasts.

But one more factor comes into play. Fannie Mae’s National Housing Survey for May showed record confidence in both price gains and real estate activity. A record 55 percent of respondents believe prices will go up in the next year, with the average 12-month home price change expectation increasing to 3.9 percent in May from 2.7 percent in April.

Additionally, 40 percent of survey respondents say now is a good time to sell a home (up 10 percent) and 76 say now is a good time to buy (up 5 percent).

The confidence factor is always a hard one to measure, but we do know it is huge in a residential real estate transaction – the largest financial decision one makes in their lifetime. Whether moving up, downsizing, or purchasing a second home – confidence in the economy and job security play a major part in the decision, and the stock market also rolls into the equation.

With confidence, you can reach amazing heights; without confidence, even the simplest accomplishments are beyond your grasp. This summer, we look forward to strong gains in sales and price on the back of increased confidence.

By Pat Riley (President and Chief Operating Officer)

Courtesy of Allen Tate’s Blog (blog.allentate.com)