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Americans optimistic over housing prices
Americans remain confident that housing values will continue to flourish and that the high-flying U.S. market will come in for a smooth, soft landing instead of a crash.
Fewer than 15 percent of Americans surveyed in a Bloomberg/Los Angeles Times poll expect home prices in their neighborhood to fall during the next six months. More than twice that, 36 percent, see prices rising during that time.
Investors making more than $100,000 a year are even more optimistic: Forty-three percent of the affluent expect prices to rise.
"I'm not worried," said Tammy Wilt, 39, a nurse living near Clinton, Pa. "I don't think it's going to be anything like a stock-market crash."
The average U.S. home price has risen 36 percent since 2002, according to the Office of Federal Housing Enterprise Oversight. The increase fueled concern that residential real estate is in the midst of a bubble that may burst and drag down the economy.
"The likely house-price nose dive will leave Americans unable to buy the nation's output," said a research note last month from Gary Shilling, president of investment advisory company A. Gary Shilling & Co. in Springfield, N.J.
Most U.S. homeowners don't agree. The majority of 2,563 adults polled from Feb. 25 to March 5, almost seven in 10, expect the value of their homes to appreciate by 5 to 30 percent during the next three years. Affluent investors are again more optimistic, with almost eight in 10 predicting such price gains. The poll's margin of error was plus or minus 3 percentage points.
While even 30 percent appreciation for home prices in the next three years would trail the performance since 2002, many still see property as the best place to invest money.
More than a third of those polled singled out real estate as the place they would put most of their money if they had $1 million to invest.
"Real estate is always a good investment because land is finite," said Tampa, Fla., resident Richard Hoffman, 58, who owns a home, two condominiums and an office.
Homeowners may be confident because they are insulated from rising interest rates. More than four of five homeowners in the poll who carry a mortgage have a fixed-rate loan.
Homeowners' optimism about housing prices doesn't mean they are counting on continued increases to finance their spending and retirement, the poll showed. Roughly three-quarters of the homeowners contacted had not tapped their home equity and say they don't intend to for retirement.
Copyright © 2006 The Seattle Times Company