Once bitten, twice … bullish? Five years after a housing market crisis nearly sent the nation into a second Great Depression, Americans are feeling pretty great about the future prospects for the nation's real estate.
In a national poll conducted as part of Bankrate's monthly Financial Security Index, a majority said they expect the value of American homes to increase over the next 12 months. Fifty-five percent say home prices will go up, compared to just 9 percent who think they will fall and 27 percent who say they will stay flat.
Coming on the heels of Bankrate's July FSI survey that showed real estate ahead of stocks as Americans' preferred way to invest money they won't need for 10 years, the new findings suggest that a horrific crash hasn't done much to dim Americans' enthusiasm for housing as an investment, says Greg McBride, CFA, senior financial analyst for Bankrate.com.
"It appears that Americans' love affair with real estate is back," McBride says. "Even though the housing bust shows that housing prices don't just go straight up, people just don't have the same risk aversion to real estate and homeownership that they do to stock ownership."
Public probably right on rising prices
Given recent trends, it's actually pretty realistic to expect home prices to continue rising over the next year, says Jeremy Edwards, a lead analyst at industry research firm IBISWorld.
"Data from the (Standard & Poor's/Case-Shiller) home-price index have shown that housing prices have risen 7.1 percent in the last quarter, and we expect that trend to continue throughout 2013," says Edwards.
If a substantial run-up in home values sounds disturbingly familiar, keep in mind that prices are still well below where they were in 2008, and -- at least at this point -- price increases look to be driven by economic fundamentals, says Edwards.
"Generally speaking we've seen improving economic conditions. We've had real (gross domestic product) revised up (to a growth rate of) 2.5 percent for the second quarter of 2013," Edwards says. "Consumer confidence is rising and was up again in August by 0.5 points, and this is largely the result of improving short-term expectations from consumers, mostly to do with more upbeat business expectations and better job prospects."