Public Still Says Housing a Good Buy, but Post-Boom Decline Evident

by Jeffrey M. Jones

Real estate edges stocks as best long-term investment

GALLUP NEWS SERVICE

PRINCETON, NJ -- Amid reports of sluggish home sales, a majority of Americans continue to believe that it is a good time to buy a house. That is not to say Americans are oblivious to the current housing market, because the percentage who believe buying conditions are favorable is much lower than it was during the housing boom a few years ago. Still, more Americans choose real estate as the best long-term investment than choose stocks, savings accounts, or bonds. Again, Americans' enthusiasm for real estate on this measure is nowhere near as high as it was five years ago.

Current Housing Market

According to the April 2-5 poll, 58% of Americans say it is now a good time to buy a house, while 39% say it is a bad time. That is slightly improved from last year, when 52% said it was a good time to buy, but well below the figures from 2003 (81%) and 2005 (71%).

In each of the six times Gallup has asked the question, at least a majority of Americans have said it was a good time to buy a house, suggesting the public thinks buying a home is a good move in general. However, the views on this matter clearly fluctuate in response to the prevailing home sales, as evidenced by the lower percentages in 1978 and 2006-2007.

In reality, buyers may be able to get a better price during a down market than when home sales are booming, so consumers' views may not make sense if taken to their logical conclusion. For many, though, a home purchase would be coupled with a concurrent home sale, so the public may (appropriately) not make a distinction between the conditions for buying and those for selling a home.

The data show that homeowners are more positive than non-homeowners about the current housing market. Sixty-one percent of homeowners believe now is a good time to buy a house, compared with 50% of non-homeowners. In 2005, when 7 in 10 Americans endorsed the idea of buying a house, there were no differences in this assessment between homeowners and non-homeowners.

Views of the housing market are also related to one's personal financial situation. Sixty-four percent of those who say they have "enough money to live comfortably" believe housing market conditions are currently favorable, compared with just 43% of those who say they do not have enough money to live comfortably.

Real Estate as a Long-Term Investment

The poll asked Americans to choose among four common investments -- real estate, stocks or mutual funds, savings accounts or CDs, and bonds -- as the best for the long term. Real estate is selected most often, with 37% of Americans naming it as the best investment. Stocks come in a close second at 31%, followed at some distance by savings accounts and CDs (18%) and bonds (10%).

But some of the bloom has come off the real estate rose in recent years as the housing boom has passed. When the same question was asked in 2002, half of Americans chose real estate. Stocks have made the greatest gains in the public's eyes since then, increasing from 18% to 31%.

Clearly, people are going to pursue what they think is the best long-term investment, to the extent they can do so. For example, stock owners are slightly more likely to view stocks (43%) as a better investment in the long run than real estate (36%). Those who don't own stocks think real estate and savings accounts are much better bets than stocks.

Even though homeowners are more positive than non-homeowners about the current housing market, the former are divided in their views as to whether real estate (38%) or stocks (36%) are the best long-term investment. Meanwhile, real estate ranks as the best long-term investment among non-homeowners, with savings accounts second.

Americans who own both a home and stocks -- just over half of all U.S. adults -- are more likely to choose stocks (44%) than real estate (35%) as the best long-term investment. Those who do not own either -- roughly one in six Americans – think savings accounts are the best long-term investment (38%), with real estate (32%) a close second and stocks (7%) rated behind even bonds (17%).

Survey Methods

These results are based on telephone interviews with a randomly selected national sample of 1,008 adults, aged 18 and older, conducted April 2-5, 2007. For results based on this sample, one can say with 95% confidence that the maximum error attributable to sampling and other random effects is ±3 percentage points. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

For results based on the sample of 704 stock owners, the margin of sampling error is ±4 percentage points.

For results based on the sample of 294 adults who do not own stock, the margin of sampling error is ±6 percentage points.

For results based on the sample of 806 homeowners, the margin of sampling error is ±4 percentage points.

For results based on the sample of 197 non-homeowners, the margin of sampling error is ±7 percentage points.

21. Which of the following do you think is the best long-term investment -- [ROTATED: bonds, real estate, savings accounts or CDs, (or) stocks or mutual funds]?

 

Real
estate

Stocks/
mutual
funds

Savings
accounts/
CDs

Bonds

OTHER
(vol.)

No
opin-
ion

National adults

%

%

%

%

%

%

2007 Apr 2-5

37

31

18

10

1

2

2002 Jul 29-31

50

18

16

13

1

2

 

 

 

 

 

 

Stock owners

 

 

 

 

 

 

2007 Apr 2-5

36

43

11

9

1

1

2002 Jul 29-31

53

22

11

12

1

1

(vol.) = Volunteered response

Turning to something else,

35. For people in general, do you think that now is a GOOD time or a BAD time to buy a house?    

 

Good time

Bad time

BOTH/
EQUALLY
(vol.)

No
opinion

%

%

%

%

2007 Apr 2-5

58

39

--

3

 

 

 

 

2006 Apr 10-13

52

44

--

4

2005 Apr 4-7

71

26

--

3

2003 Apr 7-9

81

16

--

3

1991 Mar 21-24

67

25

2

6

1978 Mar 28-30

53

29

8

10

(vol.) = Volunteered response

Now thinking about your housing,

36. Do you own or rent your primary residence?

 

Own

Rent

LIVE WITH
PARENTS
FOR FREE
(vol.)

Other

No
opinion

%

%

%

%

%

2007 Apr 2-5

73

22

3

2

*

 

 

 

 

 

2006 Apr 10-13

73

22

3

*

1

2005 Aug 22-25

74

24

1

1

*

2005 Apr 4-7

71

26

2

*

1

2005 Mar 18-20

72

24

2

2

*

2004 Apr 5-8

69

27

3

1

*

2002 Nov 22-24

70

28

1

1

*

2001 Apr 6-8

67

29

2

2

*

* Less than 0.5%

(vol.) = Volunteered response

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Gallup http://www.gallup.com/poll/27211/Public-Still-Says-Housing-Good-Buy-PostBoom-Decline-Evident.aspx
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