Monday, December 04, 2006

Homebuyers think for themselves despite dismal news about buying homes

WASHINGTON, D.C. - The nation's prospective home buyers may derive some of their information on the housing market from the news media, but at the end of the day the things that matter far more when they are deciding whether to make a purchase include the price of the new home, mortgage interest rates and their housing needs, according to a new nationwide survey commissioned by NAHB.
"While the majority of the households we polled indicated that they found the media a reliable source of information on the housing market, what they read in the newspaper, saw on television or heard on the radio was no substitute for actually going out and shopping the market," said Thomas Riehle, a partner in RT Strategies, which conducted the research for NAHB.
"When people are actually thinking about buying a home, they are driven by the details of how it will impact their family budget and lifestyle and contribute to their long-term wealth, and that gives them a much closer perspective on the market than what can be conveyed in news coverage," Riehle continued.
When asked to rate the importance of several factors that might affect their decision to buy or not to buy a home, survey respondents put the home's price at the top of the list, with 80% citing its significance.
That was followed by: the potential for the new home to appreciate in value, 71%; the prospect of selling their current home at a fair price, 70%; the level of mortgage interest rates, 69%; and personal life changes, such as a new job or an addition to the family, 60%. On a list of eight items, news stories on real estate market conditions ranked second from the bottom, with 28% saying that it was an important factor behind their decision to buy.
When further asked about the influence of the news media on their decisions of when to buy a home, only 19% of the respondents said it played an important role; 23% indicated that it had some importance on their decision; and 7% said it played a minor role. A full 48% said it had no influence whatsoever.
Sixty-one percent of the survey participants said that the media is "sometimes trustworthy" as a source of information on the housing market and 5% said that it is "always trustworthy." Twenty percent and 8%, respectively, said it is "seldom trustworthy" and "never trustworthy."
"The media provides an important service by giving consumers the big picture of what is occurring in the housing marketplace, even the big picture in their local markets," said NAHB President David Pressly, a home builder from Statesville, N.C. "But despite that, local reporting can't convey the information that consumers consider the most when they are looking for a new home.
"The fact is that even as the national market is slowing down from the unsustainable pace of the past few years, there are sizable numbers of families who need new homes. And with a wide selection of new homes to choose from, with mortgage rates remaining near historic lows and with incomes and jobs continuing to grow, the opportunities are extremely favorable for buyers in today's marketplace."
Home builders are working down their existing inventory of homes fairly quickly and the current slowdown in production is expected by NAHB economists to have run its course by the middle of 2007. From that point forward, the industry is expecting to see a good balance in the marketplace between supply and demand, setting the stage for a healthy and sustainable trend for housing, supported by a growing U.S. economy.

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