Poll Shows More Americans Deeply Concerned About Future of Home Prices

Worried about making payments on the Florida mortgage you have now? Wondering how you’ll ever qualify for that first one? You’re not the only ones.

The go-go days for home prices are over, but Mike Pietrafesa of Nassau County, N.Y., thinks it is still tough for people to buy a new home and gain a piece of the American dream.

“There are lots and lots of houses for sale that seem as though they are priced ridiculously and they aren’t selling,” he said. “I certainly think that the old standard of having 20 percent of your house value as a down payment is really out of the window these days. I definitely think it is harder, in that respect, for first-time buyers.”

• In fact, 80 percent of Americans believe it is difficult for most first-time buyers to afford a home, according to an AP-AOL Real Estate poll.
• Many people (59 percent) believe that the situation is worse now than it was five years ago, prior to the 2001-2005 run-up in prices.

Pietrafesa, 35, recalls that he had trouble finding a home he could afford. That was eight years ago. The split-level house on the Long Island is a little small, he says, but he is staying put.

Younger adults and minorities view affordable housing more of a problem now for first-time buyers compared with five years ago than do older people and whites, the poll found.

By region, 68 percent of those in the West and 63 percent of those in the Northeast say it is more difficult for first-time buyers to afford a home than it was five years ago. Fifty-four percent took this view in the South, and 51 percent felt this way in the Midwest.

The U.S. Census Bureau reported recently that a third of U.S. homeowners with mortgage loans spent 30 percent or more of their household income last year on housing costs. Such costs, which include the mortgage payments themselves, insurance, utility bills and property taxes, are usually considered excessive if they top 30 percent of household income.

Galloping housing prices during the five-year housing boom is a big factor in this, particularly here in the Sunshine State. Rising Florida mortgage rates and incomes failing to keep up with inflation are other factors.

Nationally, median home values jumped 32 percent from 2000-2005, currently standing at $167,500. Even though home prices have cooled this year, some people think they are still too high.

“A lot of home prices are out of this world,” says Patricia Cheatham, 59, who lives between Southern Pines and Lakeview, N.C. If something happened to her mobile home, she says she would not be able to afford to buy again. “I’d probably have to find a low-income rental place,” she said.

The poll found that 46 percent of those surveyed thought the housing market in their area is overpriced. Nearly the same amount — 45 percent — believed their market was priced more or less right. Only 5 percent though their market was underpriced, with the remaining few having no opinion. We can’t say for sure, but it seems unlikely these figures would be so balanced if the poll were conducted strictly within the South Florida housing market.

People in the suburbs are more likely to view the housing market as price-inflated than those who live in cities and rural areas.

Mark Zandi, chief economist at Moody’s Economy.com, says that the future of home prices probably will depend on where you live.

A study by his company predicted that slumping prices will be concentrated in the states of California and Florida and the Northeast corridor from southern Maine to just south of Washington, D.C., as well as some parts of Nevada and Arizona. In some markets, prices may not bottom out until 2009.

“But households sitting in Dallas or Charlotte, N.C., may wonder what all this panic talk is in the housing market,” says Zandi. Those are among the markets that he believes will see price gains over the next two years.

People who are interested in buying a home in the future worry most about Florida home mortgage rates going up, with 84 percent voicing a concern to that effect. Slightly fewer — 78 percent — say they worry about paying more than the fair market value for their abode.

A staggering 65 percent of residents worry about being able to afford their Florida mortgage loan, while 62 percent fear that the home might drop in value.

A significant portion of respondents, 58 percent, worry they won’t be able too gather enough money for a down payment. House hunters can benefit by showing patience, however.

Suresh Sreerameneni, 35, says he sees some some homes for sale in his Lake St. Louis, Mo., neighborhood sitting on the market longer than they have in the past and suggested that will shift more bargaining power to would-be buyers and away from sellers.

“If I was in the market now to buy, I would be happy. But if I were trying to sell, I would be worried,” he said.