Suddenly more bullish on housing?

Filed in archive mortgage news on July 14, 2009

Maybe there is something to that old "American Dream," after all. How else to explain that even as the residential real estate industry suffers through a catastrophic slump, U.S. residents still profess faith in the value of housing?

You'd think that most homeowners today — and potential homeowners — would have a rather dim view of housing in general. But a new study by economists at the University of Chicago and Northwestern University show the opposite. The study, which you can read about in this story in the Wall Street Journal, shows that just a quarter of U.S. residents expects the value of their homes to drop in the next year.

That's a big improvement from six months ago, when almost half of all survey respondents said they expected their home prices to fall.

Some respondents even said that they thought the value of their homes would rise in the next year.

What accounts for this optimism? There has been some good housing news lately. Home sales rose during the Spring. But when you compare the number sales of this year to the number last year, there's still a big drop. Housing prices, too, have been slowly inching upwards again. But again, home values are far lower now than they were just one year ago.

Maybe it's in our nature to be optimistic. Or maybe we're all taking a long-term view. Historically, housing prices have risen. You just have to hold onto your house long enough. During the housing boom, people bought homes and then tried to sell them in a year or two for big profits. That's no longer a possibility.

This is actually good. Housing was never meant to be a get-rich-quick scheme. It's an investment that takes years to mature and pay off. But if you're patient, and if you can wait out any future housing slumps, you should make a solid profit when it's time to sell your home.