Friday, December 23, 2005
Wealthy Americans confident real estate will hold its value
Here's another interesting article about real estate values in the coming years ...Most expect double-digit appreciation rate within five yearsThursday, December 22, 2005
Inman News
Almost two-thirds of wealthy Americans expect to see double-digit increases in the value of their primary homes over the next five years, with about one-third of them anticipating the value to rise 20 percent or more, according to a survey released this week by The PNC Financial Services Group.
"Our findings indicate that many among the wealthy will not believe there is a real estate slowdown until they see it reflected in their property values, especially in regions of the country where prices have skyrocketed during the past five years," said Nicholas Buss, senior vice president and real estate economist at PNC, a financial organization that provides banking, real estate finance and lending services.
"As an investment, real estate has been an increasingly dominant asset class over the past five years. The party may be over for those who have been 'flipping' houses and using real estate to get rich quick. But, in general, established wealthy Americans have not been speculative buyers and they remain solidly confident in the long-term value of their real estate holdings," Buss said.
The survey was intended to identify attitudes about wealth among high net-worth individuals, how it affects their lives, and their needs in managing wealth, PNC reported.The survey was conducted by Harris Interactive online this fall among a nationwide cross section of 1,485 adults (age 18 or over) with annual incomes of $150,000 or above (if employed), at least $500,000 of investable assets (if employed) or at least $1 million of investable assets (if retired).
The total sample contains four groups: 795 with assets of $500,000 to $999,999; 465 with assets of $1 million to $4.9 million; 109 with assets of $5 million to $9.9 million; and116 with assets of $10 million or more. Figures for age, sex, race, education, region, income, asset level and propensity to be online were weighted where necessary to bring them into line with the actual proportions in the population, the company reported.
Among the real estate findings of the survey:
– Less than one in 10 (7 percent) wealthy Americans overall expects any decline in the value of their primary homes over the next five years.
– Only about one in five (22 percent) wealthy Americans counts real estate as one of their principal sources of wealth. Those who do clearly recognize the importance of real estate to their financial health, with 39 percent of them saying a "major decline" in home values would be a threat or huge threat to their family's wealth. Residential real estate is far more likely to be listed as a source of wealth by those under age 65 (26 percent) or those with less than $1 million in liquid assets (30 percent).
– There are significant regional differences in home price expectations.
– Floridians are the most bullish while New Yorkers and New Englanders are the most bearish. Californians are closer to national norms in their outlook, the company reported.
– The PNC survey found significant regional differences in real estate outlook. In general, those living in the Southern and Western parts of the United States were more likely to expect an increase in the value of their real estate than Northeasterners. California respondents had high expectations of ongoing value increases, with approximately one-third (37 percent) expecting a 20 percent or more increase and only 8 percent expecting any decline.
"In recent years, rising housing prices have lifted consumer confidence and boosted consumer spending, but it does not appear that declining prices will dampen that confidence, at least among the affluent," Buss said.
Individuals with $500,000-$999,000 were most likely to make lifestyle changes to reduce expenses if real estate values fell by 20 percent or more, according to the survey.
Of the 32 percent of wealthy Americans who own a second vacation home or condo, half say they purchased within the past five years. Nearly two-thirds (63 percent) note they purchased their second home simply for their ongoing personal use. Only 19 percent said they bought property as an investment.
Another one-quarter (24 percent) of survey respondents indicated they own real estate as residential rental property. Californians were much more likely to own residential rental properties, the survey revealed.
Among those who said residential real estate is a major source of financial assets, rental properties were the most common form of ownership, whereas timeshares, vacation condos and commercial real estate were less common.
Harris Interactive Inc., based in Rochester, New York, is a market research firm known for "The Harris Poll" and its work in the online market research industry.
The wealth and values survey was designed and managed by HNW Inc., a provider of wealth marketing software and solutions to financial services companies and intermediaries.
Labels: Corona, Foreclosure, Home Prices, Inland Empire, Loan Modification, Moreno Valley, Murrieta, Real Estate, Riverside, Short Sales, Statistics, Temecula
|
