Consumers apparently are becoming more optimistic about the housing market, a recent study shows. The third annual Cotton Report polled more than 800 participants on housing preferences, motivating factors, pricing levels and timelines for purchase. The survey included participants from 39 states, Canada, Europe and Latin America.
While no direct correlation was made to the harsh temperatures of this winter, the research survey indicated a substantial increase in the number of homebuyers seeking a vacation home purchase, an increase of 800 percent year-over-year. There was also an increase in the number of buyers describing their transition as a geographic relocation, now 40 percent of respondents.
Over the three-year period of the annual study, a continuous trend towards smaller homes has been noted with the most popular size home now being 1,700 to 2,299 square feet. Homes ranging from 1,000 to 1,699 square feet saw an increase of 5 percent in interest levels from 2010 to 2011.
The Cotton Report also shows signs that pricing levels have adjusted to meet consumer expectations. In 2009, respondents indicated the need for a 50 percent reduction in order to re-enter the market. In the 2011 survey, this level of price reduction has changed, with the median response being a 20 percent reduction. This trend was also reflected in the consumer’s timeline to purchase. In 2011, 25 percent of respondents reported they would be purchasing within 6 months, an increase from just 4 percent at the same time last year.
The annual consumer report is compiled by Cotton & Company, a 28-year old firm specializing in the marketing and sales of residential real estate throughout the United States and the Caribbean.
Stephann Cotton, the firm’s president, noted in a prepared statement, “The adjustment of pricing to realistic levels has brought buyers and sellers closer together. These price adjustments combined with the brutal winter up North have resulted in strong sales in many of our resort residential properties.”
While questions remain in the U.S. mortgage market about the future of the 30-year mortgage, the survey indicates that 36 percent of the respondents plan to utilize a 30-year mortgage to make their purchase. An equal 36 percent are cash buyers with 21 percent indicating plans for a 15-year mortgage.
“One of the most dramatic changes in buyer psychology was seen in the responses from those who are uninterested in a real estate purchase,” said Laurie Andrews, Cotton & Company’s chief operating officer. In 2010, 96 percent of these respondents cited economic conditions or political instability as the reason for not purchasing. In 2011, this number was cut in half, with 46 percent of the respondents now indicating that they have no desire to move. “These results show buyers are beginning to separate the home buying process from the economic instability.”