Home News Consumers Think It’s a Terrible Time To Buy, But They’re Also Fairly Terrible Housing Forecasters

Consumers Think It’s a Terrible Time To Buy, But They’re Also Fairly Terrible Housing Forecasters

by admin
0 comment

Consumers think it’s a terrible time to buy, but they’re also pretty terrible home predictors

Fannie Mae conducts a monthly survey of home buying sentiment. This is officially known as the Hope Buying Emotion Index (HPSI). In addition to price / rate expectations, track buyer / seller attitudes about whether it is a good time to buy / sell. Given the ongoing rise in prices and the recent rise in interest rates, the latest results are hardly surprising.

One thing to understand about HPSI is that it benefits from components that do not necessarily have a positive impact on the housing market, at least not directly. For example, price trends, employment, and income all affect the number of headlines. These components are the only ones that prevent HSPI from sending the purest messages, but when you look at the “good time to buy” components, the messages are clear.

Since Fanny just started collecting this data in 2010, it’s unclear if the seriousness of the housing crisis has seen a more serious imbalance among those who think it’s a good time to buy or sell. But that’s not that important. The important thing is that the feeling of buying a home is in the bathroom. It’s interesting for buyers in some regions where inventory constraints still lead to multiple offers for pricing.

If only homeowners listen to their own advice and list their homes! After all, 76% of them say it’s a good time to sell!

Maybe they’re waiting to squeeze a few dollars of profit from the deal. Forty-seven percent of them believe prices will continue to rise for more than 12 months, in contrast to 23%, where prices are expected to fall.

And now, about some of the dirty little secrets of consumer sentiment surveys … economists and traders are based on the belief that it’s time for the real market to understand widespread economic trends. Surveys are often used as an indicator of contrarian / economy to move on to the next trend. For clarity, this is not a claim made with Fanny’s data-just my own color commentator. In my opinion, it should precede the following two elements:

First, the highest number of respondents ever said that prices are likely to rise in the next 12 months. That’s not that bad, but it’s important to note that what these consumers are actually doing is observing what happened at rates for the last few weeks / months.

In other words, it reflects how rates are moving, rather than a careful analysis of how they will behave in the future. Otherwise, more balance is here as financial markets are becoming a more neutral stance that enables economic data and the Fed’s policies shift to raise and lower interest rates over the next 12 months. You can see it. In any case, based on the surges seen so far in 2022, it is less likely that the market will maintain another meaningful interest rate surge.

By the way, this chart has a strong bias that will be seen in mid-2020. In a nutshell, consumers are always biased towards the belief that interest rates will be higher. A strong tendency towards lower rates leads to the assumption that “it can’t be that much better”, and a strong tendency towards higher rates doesn’t seem to have the opposite effect (that is, “it can’t be that bad”). .. To be fair, perhaps some of the latter are seen in the latest bounce of the red dotted line above when it drops from 73% to 70%.

The final proof of today’s discussion against over-reading consumer speculation about the future of prices / prices is provided in the form of an average expected price change chart. I let this talk for myself. It is sufficient to say that the recent high estimate of 3.8% annual price increase was slightly lower than the consistent increase of about 20%.

You may also like