Survey finds Americans wildly misinformed on housing market
A new survey finds Americans are woefully misinformed about the nation’s mercurial housing market, even as millions of them prepare to buy homes.
Twenty-eight million Americans plan to purchase a home in 2023, according to a survey released Tuesday by NerdWallet, the personal finance company. On average, they hope to spend $269,200.
But that figure falls more than $100,000 short of the median home price, which was $388,100 in December, according to the real estate brokerage Redfin. Home prices crossed the $269,000 threshold sometime in 2013, Federal Reserve statistics show.
If prospective homebuyers sound oddly optimistic about prices, that may be because they are pessimistic about the state of the housing market. Two-thirds of Americans surveyed said they expect an imminent crash.
Real estate economists do not. Lawrence Yun, chief economist for the National Association of Realtors, forecast an average sale price of $385,800 this year, about the same as last year. Redfin predicts a 4 percent drop: bad news for sellers, but hardly a crash.
“Home prices already have been falling, especially on the West Coast, and prices will fall in some cities in 2023,” said Holden Lewis, a home and mortgages expert for NerdWallet. “But a drop in home prices isn’t necessarily a crash.”
Another head-scratcher: 61 percent of Americans told pollsters current mortgage rates are unprecedented, meaning that they have never been seen before.
“We actually defined it,” said Elizabeth Renter, data analyst for NerdWallet.
The average rate for a 30-year fixed mortgage hit 6.15 percent last week, according to the Fed. That’s higher than most mortgage rates of the past few years, which have ranged below 3 percent at times.
But it is not unprecedented. Over the last 50 years, NerdWallet reports, 30-year mortgage rates have averaged 7.75 percent. Mortgage rates in the 6 to 7 percent range were common as recently as 2008.
Homebuyers have basked in a climate of historically low rates for more than a decade. The Fed cut rates dramatically in the Great Recession of 2008 to stimulate the economy, a campaign that continued, on and off, through the COVID-19 pandemic.
Runaway inflation prompted a dramatic series of hikes in 2022, which pushed mortgage rates back to “normal” levels, at least in a historical sense.
The new survey of 2,051 American adults, conducted by the Harris Poll for NerdWallet, is the latest iteration of an annual poll. Pollsters have found overconfident home shoppers for several consecutive years.
“We know from the past five years, roughly 10 percent of Americans say they’re going to purchase a home in the next 12 months, which is wildly optimistic,” Renter said. “Part of it could be that they’re unaware of what’s going on in the housing market.”
Nearly 30 million Americans plan to buy a home in 2023. In all likelihood, just a small percentage of them will succeed: Only 6 million existing homes sold in 2021.
The survey found more realism when asking respondents how their homebuying plans had panned out in 2022.
Seventy percent of Americans who had planned to buy a home in 2022 did not succeed. Some of them made offers that were not accepted. Others shelved their plans because they couldn’t find affordable homes.