PRINCETON, NJ -- Americans' growing optimism about the housing market continues, with 56% of Americans now expecting average home prices in their local area to increase. That is up from 33% just two years ago, and from a low of 21% in January 2011, but still below the readings of 60% or higher prior to the housing market downturn.
The results are based on Gallup's annual Economy and Personal Finance poll, which has tracked Americans' perceptions of the housing market annually since 2005.
From 2008-2011, Americans were typically more likely to expect local home values to decrease rather than increase. By April 2012, public optimism about home values outweighed pessimism by 33% to 23%. Now, more than five times as many Americans believe local home values will increase (56%) rather than decrease (10%).
Those living in the West -- including the state of California where real estate values are among the fastest rising in the nation -- are most likely to think home values will increase, at 72%. By comparison, 44% of Eastern residents expect home prices to increase. A slight majority of Southern (54%) and Midwestern residents (53%) agree.
Americans' views of local home values may also be influenced by their own experiences. The poll estimates 64% of Americans are homeowners. Of this group, 74% say their home is now worth more than when they bought it, up from 63% last year and 53% in 2014. Even with the increase, though, these perceptions have still not fully recovered to what Gallup measured in 2006 and 2007, when upwards of 90% of homeowners said their home value exceeded the purchase price.
Three in Four Americans Endorse Buying a Home at Present Time
Seventy-four percent of Americans say it is a good time to buy a house, while 24% call it a bad time. That ranks among the most positive readings Gallup has found on this question.
Americans' optimism on this measure dropped sharply to 52% saying it was a good time to buy a house in 2006, just as home values were reaching their peak during the housing bubble. During the next two years, as home values plummeted, Americans continued to be less positive about buying a home. That changed in 2009, as depressed home values meant houses were a better buy than at the peak. Since then, the percentage of Americans who say it is now a good time to buy a house has been near 70%, but showing marginal increases in each of the past three years.
At 81%, homeowners are more likely than renters (60%) to say it is a good time to buy a house.
Americans continue to be more positive about the housing market than they were in the aftermath of the housing market downturn. This comes at a time when home values remain below where they were during the peak of the market in early 2006, though values are rising again. As a result, there has been a sharp increase over the last two years in the percentage of homeowners who say their house is worth more than when they bought it, which means it is likely that fewer homeowners are "underwater" on their mortgages than in recent years.
Americans' views of the housing market were clearly shaken during the downturn, but have mostly recovered today, with nearly three in four now saying it is a good time to buy a house. That could reflect the realization that the worst of the housing crisis is over, but that values have not yet risen to a level where homes are over-priced.
These more positive views of the housing market may help foster a situation in which home buying activity increases and home values continue to rise over the next year.
Results for this Gallup poll are based on telephone interviews conducted April 3-6, 2014, with a random sample of 1,026 adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia.
For results based on the total sample of national adults, the margin of sampling error is ±4 percentage points at the 95% confidence level.
For results based on the total sample of 737 homeowners, the margin of sampling error is ±5 percentage points at the 95% confidence level.
Interviews are conducted with respondents on landline telephones and cellular phones, with interviews conducted in Spanish for respondents who are primarily Spanish-speaking. Each sample of national adults includes a minimum quota of 50% cellphone respondents and 50% landline respondents, with additional minimum quotas by time zone within region. Landline and cellular telephone numbers are selected using random-digit-dial methods. Landline respondents are chosen at random within each household on the basis of which member had the most recent birthday.
Samples are weighted to correct for unequal selection probability, nonresponse, and double coverage of landline and cell users in the two sampling frames. They are also weighted to match the national demographics of gender, age, race, Hispanic ethnicity, education, region, population density, and phone status (cellphone only/landline only/both, and cellphone mostly). Demographic weighting targets are based on the most recent Current Population Survey figures for the aged 18 and older U.S. population. Phone status targets are based on the most recent National Health Interview Survey. Population density targets are based on the most recent U.S. census. All reported margins of sampling error include the computed design effects for weighting.
In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.
For more details on Gallup's polling methodology, visit www.gallup.com.