Half of Investors Believe Housing Market Currently Is Strong

This week’s Sentiment Survey special question asked AAII members what their perception is of the current state of the housing market. About half of all respondents (51%) describe the housing market as strong. High demand and tight supply, as well as low interest rates were among the reasons given. Many of these respondents describe the housing market as “hot,” “bullish” or “booming.”

About 18% of respondents believe the housing market is entering bubble territory, claiming it is a “disaster waiting to happen” and blaming low interest rates, speculation and fear of being left out. Only 3% of respondents say that they believe the housing market is performing poorly, while 12% say the market is doing poorly only in cities.

Here is a sampling of the responses:

• “The housing market is ‘hot.’ Why? Limited supply and low mortgage rates are a couple of reasons. But another factor may be that a home in the suburbs may be better than a condo or apartment in the city when you are no longer required to work at your employer’s office. And then, of course, family size may require more room when everyone is on a computer.”
• “The housing market has bounced back smartly during the pandemic, fueled by low interest rates and excess consumer capital chasing goods. However, I still worry that the current hot run of the housing market can’t be sustained if employment does not improve and unemployment remains below 10%.”
• “New construction of residential homes appears to be buoyed by Americans’ desire to get out of the city as a result of the pandemic. And then to add historically low interest rates, it appears that the outlook is bullish. This may be tempered, however, by job loss as a result of the recent economic downturn generated by the virus. The unemployed cannot get a mortgage. The upturn may not be long-lived.”
• “If you have the money or can get the money, buy a home! With rates as low as they are, buy a home. It’s also a great time to sell if you have a place to move into. You should be able to get your selling price or higher.”
• “The housing market is in bubble territory in most locations. It is being fueled by abnormally low interest rates, fear of being left out and speculation.”

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