Only time will tell how the residential real estate market will be affected by the expiration of the homebuyer tax[IMAGE]
credits, but a survey released Wednesday by ""Prudential Real Estate and Relocation Services, Inc."":http://www.prudential.com/view/page/public, found that the sunset of these incentives is unlikely to deter future home purchase activity.
While more than 90 percent of consumers surveyed said the tax credits have helped both first-time homebuyers and the U.S. housing market overall, 65 percent of consumers shopping for a home said the end of these credits will have little or no effect on their interest in purchasing a home.
Consumers are still unsure about the direction of the housing market, but the survey revealed that they are becoming more optimistic about real estate values, with 46 percent of respondents expecting real estate prices in their area to increase over the next year and just 12 percent predicting a decline. Over the next five years, 79 percent of those surveyed believe prices will increase, with 20 percent anticipating prices to increase substantially.
""The survey underscores the key role the federal homebuyer tax credits played in stimulating residential real estate market activity and the U.S. economy,"" said[COLUMN_BREAK]
James Mallozzi, chairman and CEO of Prudential Real Estate and Relocation Services. ""It also shows that most consumers believe the market has hit bottom and are more optimistic about the future.""
When identifying the most important factors affecting their decision to purchase a home, respondents cited concerns about rising mortgage interest rates and unemployment, along with more stringent lending criteria and fewer mortgage-backed securities purchased by the Federal Reserve. In fact, the expiration of the tax credits placed lowest on their list of concerns.
Among those who had recently purchased a home, 61 percent cited low mortgage interest rates as ""very important"" to their decisions Ã¢â‚¬" an amount greater than either the tax credit or low prices.
""The tax credits clearly helped stimulate the market when consumer confidence was low and housing inventory was high,"" said Earl Lee, president of Prudential Real Estate and Relocation Services. ""While the tax credit expiration is a concern for many, the bigger issues now are the availability and cost of financing as well as if they will have a job.""
The survey also found that the dream of homeownership and the perception that owning a home is a good investment remain intact. Among current renters, 75 percent still believe owning their home is a better long-term choice for their needs than renting. And the majority of consumers surveyed said that homeownership is a better investment than individual stocks or bonds, mutual funds, or savings accounts.
""While the market is picking up in terms of sales and confidence, and the majority still believe that owning a home is a good investment, the outlook for the market remains highly dependent upon the direction of the economy overall,"" Lee said.