Record Number of Americans Believe Now Is a Bad Time to Buy a Home

May 11th, 2022  / Author: Cesar Gomez

The real estate market is going through a period with record-breaking numbers that are not exactly favorable to an average buyer. In real estate market news, you can often find titles with ‘’record lows’’ and “record highs”, and the new report about homebuyers’ view of the market is no different.

According to the latest Gallup poll, the pessimism in the market has never been this low in recorded history. The April 2022 data shows that only around 30% of respondents feel it is a good time to buy a house.

This number has never been south of 50% since they started surveying in 1978. Again, record low numbers send a message that the market has been overvalued for quite some time now, and the rising rates are just emphasizing it.

Gallup’s Poll Shows Lack of Positivity in the Market

Gallup’s poll shows that all subgroups of Americans believe it isn’t a good time to buy a property. Housing markets in the States are waiting for an influx of supply which isn’t happening, at least not fast enough. The average wage is rising; however, it isn’t following the price surge, so many are left pessimistic about homeowning.

Out of three age groups of respondents, all three expressed a significant drop in optimism, millennials being the most bearish. Only 25% of millennials think it is a good time to buy a house, which is understandable given the fact that most first-time buyers are up to 35 years in age - and the market hasn’t been favorable to first-time buyers.

A somewhat better perspective is held by generation X, with 28% of them thinking it is a good time to buy. With 35% percent of people older than 55, this category has the highest faith in the real estate market, but it is still substantially lower than in the past years.

Since the Fed raised yields for 100-year Treasury bonds, mortgage interest rates soared past 5.1% in just a few months. Freddie Mac and Fannie Mae will guarantee much fewer loans than they did since the start of the pandemic. These inflation-fighting actions prompted different wage groups to respond negatively to Gallup’s poll.

Interestingly, despite earning less, lower-earning workers (<$40,000) think more highly of the market than others. The biggest gap between the 2021 and 2022 incentives is seen with high-earners (>$100,000), meaning that those who earn the most have the most negative view of the real estate market favorability. This could be correlated with the housing market forecast that investors are soon to leave the real estate market.

Yearly wages 2021 2022
> $100,000 55% 27%
$40,000 - $99,999 53% 29%
< $40,000 54% 33%

Is Economic Decline on the Way?

Gallup representatives explain that this negative attitude expresses more than just mere worry about the real estate market, and transcends to respondents’ view of the country’s economy. The percentage for the same poll was the highest in 2014 when 74% of respondents felt it is a good time to buy a house - now the situation is reversed.

Even Fannie Mae doubts that the economy will have a soft landing after this pandemic-driven housing boom. They predict a modest recession in 2023, with prices still rising in the next 12 months, but not as fast as they previously were.

Potential first-time buyers will continue to be priced out, as the inflation eats away a huge chunk of their paycheck and the interest rates make it impossible for them to become homeowners.



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