A recent LendingTree survey of 609 consumers (conducted online by Research Data Technology, Inc.) concluded that its respondents have a pretty sunny view of...

A recent LendingTree survey of 609 consumers (conducted online by Research Data Technology, Inc.) concluded that its respondents have a pretty sunny view of the US economy and real estate markets.  With 69 percent of respondents claiming to have positive expectations for the housing sector and 63 percent saying the US economy will keep improving in 2014,  this could translate into a lot of real estate activity in the next 12 months. Nearly three-fourths (71 percent) of current homeowners said they are considering selling their home during the next year.

Interest Rates and Real Estate Heat Up

The vast majority of respondents — 74 percent — say that they expect mortgage rates will rise in the next 12 months. Sixty percent predict a “moderate” increase, while 14 percent expect rates to spike considerably higher.

Despite the general assumption that mortgage rates will be up, those surveyed plan to actively participate in the real estate market this year. Of the 71 percent of homeowners considering selling in 2014, 24 percent plan to definitely market their house, while 47 percent only plan to sell if their property value increases. Just 15 percent of homeowners say they don’t plan to sell a home in 2014, and another 15 percent are undecided.

Most of this potential activity is driven by younger homeowners, with 90% of those under 30 considering selling in 2014, and 78 percent of homeowners aged 30-39 thinking about putting their homes on the market within 12 months.

Are Home Prices Really Rising that Much?

Home prices appear to be (finally) on the move — 72 percent of respondents think that their local housing values rose during the past 12 months, while 20 percent believe area housing prices dropped, and 8 percent thought real estate values remained flat.  How does that jive with reality? S&P/Case-Shiller Home Price Indices data collected through October 2013 indicated that the 10-City and 20-City Composites posted year-over-year gains of 13.6 percent.

In the areas where survey respondents believed values have improved, prices  increased an average of 10.2 percent.  This figure tracks the National Association of Realtor’s reported US home price increase of 12 percent for 2013.  For those who believe home values declined in their areas, 9.2 percent is the average perceived drop in home prices. It appears that the survey respondents had a pretty realistic view of their local markets.

What it Could Mean

A hotter real estate market means plenty of competition on both the buying and selling end. Sellers can get a leg up by contributing to buyers’ closing costs (mortgage lenders allow 3% to 6% contributions), making sure their properties can pass an FHA or VA inspection, and promoting assumable loans at lower rates if they currently have government mortgages. Potential sellers may even want to consider refinancing to an FHA or VA loan that can be assumed — a major selling point if mortgage rates rise this year.

Some factors that can help buyers compete for the best homes and deals include getting pre-approved for their mortgages before home shopping, evaluating their credit reports and scores and working to improve them ahead of time, and shopping for the best deals on their home loan — the lower the rate, the more buyers can qualify to borrow.

About the Survey

Survey results are based on 609 individuals who currently own their home or are considering purchasing a home within the next 12 months.  These homeowners and potential homebuyers participated in an online survey conducted by Research Data Technology, Inc., on behalf of The LendingTree, from December 20, 2013 through December 28, 2013.  The 609 respondents represent a targeted sample of homeowners and potential homebuyers that were selected from a consumer panel of individuals in the US with access to the Internet.  The margin of error in this survey is ±4%.  This means that in 19 cases out of 20, survey results based on 609 respondents will differ by no more than 4.0 percentage points in either direction from what would have been obtained by seeking the opinions of all eligible individuals who are online. 
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