What Will Your Home Be Worth In 5 Years?

If you’re like most Americans, the value of your home has already dropped significantly. And, home prices have continued to decline so far this year. There’s no real recovery in sight as attested by a recent poll showing just 15% of homeowners believing their house will be worth more next year. A look inside the numbers indicates the future is troubling.

First consider the short-term market attitudes. Following a survey conducted in mid-April by Rasmussen it was reported that 15% of homeowners thought their homes would go up in value next year, 33% expected they would be worth less and 50% said they would retain their current value.

Of course, by maintaining a home’s market value today means it may sell for 20% less than just a couple of years ago. That’s a big loss of potential income for anyone, especially new seniors who expected their homes would help finance retirement expenses. Many of these 65+ homeowners hoped to sell the house and move to smaller quarters. Some wanted stay put and get a reverse mortgage. Others planned to wait until it was time to go into a retirement community before placing their homes on the market.

In the meantime, those who are decades away from retirement continue to worry about making monthly payments and hope things will eventually turn around. However, their attitudes suggest a bleak picture going forward. In April 2009, 55 % of respondents said the value of their home would increase in the next 5 years. In April 2011 the number dropped to 39%. This is down by 5 points in a single month and represents the highest negatives in a 2 year period.

Men have a more positive attitude toward home values increasing over the next half-decade (45%) compared to women (33%). For prices remaining the same, 31% of men said they would as did 42% of the women. Among those believing prices will continue to fall, men and women were about equal at 18% and 19% respectively. And, attitudes tended to become more negative with age; nearly half (49%) of those 30 to 39 saying prices will go up in the next 5 years while only 37% of those 65+ shared this belief.

Waiting for the market to get healthy can be an expensive proposition. Energy costs are on the rise as are the prices for building materials needed to keep a home looking good. All the while, many homeowners are faced with rising property taxes. So owning a home has become less attractive to some. This makes the potential buyers pool even smaller.

Nonetheless, most Americans dream of owning a home and still consider it a good investment. This means saving for a down payment rather than getting into a place for nothing down and interest only for several years. Smaller homes at lower prices are growing in popularity. Multi-generational families (grandparents living with their adult children and the grandkids) may influence marketplace dynamics. One thing is certain; there will always be a real estate market in this country. We just don’t know what it will look like as changes occur in the months and years ahead.

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