The new quarterly Prudential Real Estate Outlook Survey revealed that nearly two-thirds (64%) of respondents had a favorable perception of the U.S. housing market, a 4-point jump from the first-quarter 2012 survey and a 12-point increase from first quarter 2011. As a matter of fact, nearly seven out of 10 Americans surveyed (69%) also indicated that real estate is a good investment – that’s up 6% from first-quarter 2012 survey results and 17% from first quarter 2011.
2. Survey Background
Objective:
Gather insight on the factors impacting buyer/seller real estate decisions in today’s economy.
Audiences:
Respondents are aged 25-64 with a household income of at least $50,000, and either recently
bought/sold a home or are considering buying/selling a home.
Similar studies were conducted in February 2011 and Q1 2012 and are used as a benchmark
periodically throughout this report.
Total Respondents: 1,250
Targeted sample of Americans “in the market” for buying or selling a home
– 500 “Recent Transactors” – Bought/sold home within the last year
– 500 “Likely Transactors” – Indicated they are likely to buy/sell home within next year
– 250 “Contemplators” – Considered buying/selling within last year, but did not
The margin of error is ± 2.8% for all respondents and higher for subgroups.
Methodology:
Interviews were conducted online by Penn Schoen Berland, between May 22 and June 1, 2012.
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3. Key Findings
Confidence is rising in homeownership and the recovery of the U.S. real estate market
– 69% believe that real estate is a good investment despite the market volatility of the past few years, up 6 percentage points from
the first-quarter 2012 survey and 17 percentage points from the first-quarter 2011 survey.
– 72% expressed confidence that the real estate market and property values will improve during the next two years, including a 6-
point jump among those “very confident” or “confident” vs. the first quarter 2012, and a 14-point gain in this subset over the
first quarter 2011.
The Recession has not deterred Americans from the goal of homeownership
– Nearly two-thirds (64%) of respondents have a favorable perception of the U.S. housing market, up from 60% in the first quarter
2012 and 52% in first quarter 2011. However, Americans are more cautious than before – 30% strongly agree that the housing
crisis reminded them they have to be more careful about buying or selling a home.
– Owning a home is still very important to 78% of respondents, unchanged from the first-quarter 2011 survey.
Belief that now is a good time to buy remains high
– With interest rates at historically low levels, 96% of respondents at least “somewhat agree” that now is a great time to buy a
home. That’s unchanged from the first-quarter 2012 survey.
Emotional reasons outweigh financial reasons for owning a home
– Survey respondents emphasized “control of living space,” “more space for family,” “safer neighborhood,” and “good place to raise
a family” before “a good investment,” “financial security” and “tax benefits.”
Caution remains
– 30% of respondents “strongly agree” that the housing crisis reminds them to be more careful about buying or selling a home, up
2 points from the first-quarter 2012 survey.
– 65% of respondents said that securing a mortgage is more challenging that it ever was before the market crisis, a 7-point jump
from the first quarter 2012.
– Among those considering a real estate transaction, 39% expressed concern about selling their home, an 11-point increase from
the first-quarter 2012 survey and 10 points higher than first quarter 2011.
Importance of Real Estate Agents
– Nearly three-quarters of respondents (74%) said it’s more important than every to work with a good real estate agent for best
success in buying or selling a home, up from 71% in the first quarter 2012 survey and from 67% in first quarter 2011.
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4. Confidence in rising in real estate’s recovery
Confidence increased among all audiences; Recent Transactors are the most confident in the
recovery
All
Q2 2012 39% 33% 27%
Q1 2012 33% 37% 30%
Considering the U.S. 2011 25% 43% 32%
economy’s ongoing recovery Recent Transactor
from the "Great Recession," Q2 2012 48% 26% 25%
how confident do you feel Confident
Q1 2012 41% 31% 28%
that the real estate market Somewhat 2011 26% 41% 33%
and property values will at
Likely Transactor
least begin to recover in the Not Q2 2012 42% 37% 22%
next year or two?
Q1 2012 34% 36% 29%
2011 28% 43% 29%
Contemplator
Q2 2012 18% 39% 44%
Q1 2012 12% 52% 36%
2011 17% 45% 38%
All Recent Transactor Likely Transactor Contemplator
Q2 2012 Q1 2012 2011 Q2 2012 Q1 2012 2011 Q2 2012 Q1 2012 2011 Q2 2012 Q1 2012 2011
Very confident 16 11 5 23 16 6 16 10 5 2 2 4
Confident 23 22 20 25 25 20 26 24 23 16 10 13
Somewhat confident 33 37 43 26 31 41 37 36 43 39 52 45
Not very confident 21 24 27 19 21 27 17 24 24 35 31 34
Not at all confident 6 6 5 6 7 6 5 5 5 9 5 4
4
5. Optimism is returning to the real estate market
Favorability is up 12 points from 2011, and 4 points from Q1
All
Q2 2012 64% 37%
Q1 2012 60% 40%
2011 52% 48%
Recent Transactor
Q2 2012 69% 31%
Based on your personal
experience and/or what you Q1 2012 71% 29%
know about the process of 2011 57% 43%
Favorable Likely Transactor
buying and selling homes,
what is your overall Unfavorable Q2 2012 68% 32%
perception of the residential Q1 2012 56% 43%
real estate market in the 2011 53% 47%
United States? Contemplator
Q2 2012 42% 59%
Q1 2012 56% 43%
2011 41% 59%
All Recent Transactor Likely Transactor Contemplator
Q2 2012 Q1 2012 2011 Q2 2012 Q1 2012 2011 Q2 2012 Q1 2012 2011 Q2 2012 Q1 2012 2011
Favorable 24 20 14 33 31 16 24 17 14 4 17 9
Somewhat favorable 40 40 38 36 40 41 44 39 39 38 39 32
Somewhat unfavorable 28 29 33 26 21 28 24 30 32 41 30 46
Unfavorable 9 11 15 5 8 15 8 13 15 18 13 14
5
6. Real estate is still considered a good investment
Despite market volatility of previous years, 69% believe real estate is a good investment, up
sharply from Q1 and from 2011
Roughly 3 in 4 recognize the importance of working with a good real estate agent when buying
or selling a home, a steady increase from the previous two surveys
Financing a home remains a concern among respondents
Please indicate your level of agreement or disagreement All Recent Transactors Likely Transactors
with the following statements.
IF RECENT/LIKELY TRANSACTOR Q2 Q1 Q2 Q1 Q2 Q1
2011 2011 2011
Showing % Strongly Agree / Agree 2012 2012 2012 2012 2012 2012
Given the dynamics and challenges of today’s real estate
market, I think it is more important than ever to work with a 74 71 67 75 71 70 71 73 64
good realtor for the best success in buying or selling a home
Even though my house is worth less, I know I can also buy a
67 64 64 67 63 -- 66 66 65
new house at a lower price
I think real estate is a good investment despite the market
69 63 52 72 63 52 65 61 53
volatility of the past few years
Financing/getting a mortgage is more challenging than it
65 58 61 67 56 62 63 60 60
ever was before the market crisis
Rationally, I understand housing prices are down and by
historical standards this might be a good time to buy real
43 36 -- 42 39 -- 44 33 --
estate, but my emotions and concerns hold me back from
buying or selling a home
I regret not selling my home in the past year 19 16 12 -- -- -- 19 16 12
I regret selling my home in the past year 20 13 10 20 13 10 -- -- --
6
7. Owning a home remains very important
Owning a home is still “very important” to nearly 4 in 5 respondents
How important is owning a home to you?
1% 2%
Q2
20% 78%
2012
1%2%
Q1
19% 78%
2012
Not at all important Not very important Somewhat important Very important
All Recent Transactor Likely Transactor Contemplator
How important is owning a home to you?
Q2 2012 Q1 2012 Q2 2012 Q1 2012 Q2 2012 Q1 2012 Q2 2012 Q1 2012
Very Important 78 78 81 82 78 78 70 68
Somewhat Important 20 19 17 16 19 19 26 27
Not very important 2 2 1 2 2 3 4 2
Not at all important 1 1 1 0 0 1 0 2
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8. Reasons for homeownership favor the emotional side
Safety, control and family continue to be more important than financial considerations
When thinking about the reasons you All Recent Transactor Likely Transactor Contemplator
might own a home, how important are
each of the following? Q2 2012 Q1 2012 Q2 2012 Q1 2012 Q2 2012 Q1 2012 Q2 2012 Q1 2012
Showing % Very Important
It allows me to have more control over
70 69 69 66 73 73 65 66
my living space
It allows me to have more space for my
62 63 60 60 67 67 55 60
family
It allows me to live in a safer
neighborhood where people look after 61 61 61 62 63 60 57 57
each other
It gives me a good place to raise a family 59 59 58 58 62 61 54 56
It is a good investment 56 55 58 54 57 56 51 55
It gives me a sense of pride or
57 54 59 54 62 56 42 48
accomplishment
It gives me financial security and
something I can borrow against if 43 45 45 47 45 47 33 36
needed
It gives me tax benefits 46 45 48 44 48 47 41 42
It means I can live in an area with better
43 44 45 43 46 46 34 43
schools
It allows me to live in a more convenient
40 43 41 44 44 44 30 38
location closer to family & friends
It allows me to live in a community
45 42 47 48 48 41 35 33
where people share my values
8
9. Now is a great time to buy a home
96% agree that with interest rates at historically low levels, now is a great time to buy a home
With interest rates at historically low levels, now is a great
time for me to buy a home
Q2
2012 39% 35% 22% 3% 2%
Q1
2012 39% 35% 22% 3% 1%
Strongly agree Agree Somewhat agree Somewhat disagree Disagree
How strongly do you agree or All Recent Transactor Likely Transactor Contemplator
disagree with the following
statement: With interest rates at
historically low levels, now is a Q2 2012 Q1 2012 Q2 2012 Q1 2012 Q2 2012 Q1 2012 Q2 2012 Q1 2012
great time for me to buy a home
TOTAL AGREE 96 96 96 96 95 98 93 94
Strongly agree 39 39 40 42 42 40 29 30
Agree 35 35 36 34 33 38 35 32
Somewhat agree 22 22 20 20 20 20 29 32
TOTAL DISAGREE 5 4 4 5 5 2 7 6
Somewhat disagree 3 3 3 3 2 1 5 5
Disagree 2 1 1 2 3 1 2 1
9
10. Homeownership is good for the economy
Even though it is more difficult to buy a home now than it was for our parents’ generation it
remains an important part of the American Dream
All Recent Transactor Likely Transactor Contemplator
How strongly do you agree or disagree with
the following statements?
Showing % Strongly Agree Q2 2012 Q1 2012 Q2 2012 Q1 2012 Q2 2012 Q1 2012 Q2 2012 Q1 2012
TOP HALF
Homeownership is an important part of the
42 39 42 42 46 41 34 29
American Dream
With interest rates at historically low levels,
39 39 40 42 42 40 29 30
now is a great time for me to buy a home
Homeownership is good for the economy 41 38 42 40 45 37 30 33
Finding the right home and community is
33 31 34 36 36 31 27 21
crucial to helping my family be happy
The housing crisis reminded me that I have to
be more careful about buying or selling a 30 28 24 26 31 27 41 34
home
It’s more difficult to buy a home now than it
34 27 31 26 34 27 37 29
was for my parents’ generation
Having a good realtor can help me make the
right choices about the type of home and 28 26 29 29 29 27 23 17
community I want
Having a realtor when buying or selling a
22 19 25 22 23 19 14 12
home is worth the fee
I trust my realtor’s advice 18 16 25 22 16 15 9 6
10
11. Homeownership is part of the American Dream
42% strongly agree that homeownership is an important part of the American Dream, up 3
points from the first quarter
Homeownership is an important part of the American Dream
Q2
2012 42% 35% 19% 3% 1%
Q1
2012 39% 35% 22% 3% 1%
Strongly agree Agree Somewhat agree Somewhat disagree Disagree
How strongly do you agree or All Recent Transactor Likely Transactor Contemplator
disagree with the following
statement: Homeownership is an
important part of the American Q2 2012 Q1 2012 Q2 2012 Q1 2012 Q2 2012 Q1 2012 Q2 2012 Q1 2012
Dream
TOTAL AGREE 96 96 97 95 97 97 95 95
Strongly agree 42 39 42 42 46 41 34 29
Agree 35 35 37 34 31 33 38 42
Somewhat agree 19 22 18 19 20 23 23 24
TOTAL DISAGREE 4 4 4 5 3 4 5 5
Somewhat disagree 3 3 2 3 3 3 4 4
Disagree 1 1 2 2 0 1 1 1
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12. Contemplators are waiting for the right time to buy
or sell
Lingering economic uncertainty and fears of being unable to sell current home are holding back
Contemplators
IF CONTEMPLATOR: Earlier in the survey, you indicated that you’ve been considering buying or selling a
home for the past year. For what reasons, if any, have you not yet bought or sold a home? Select all that
apply.
47%
Waiting for right opportunity 47%
43%
39%
I’m worried I won’t be able to sell my current home 28%
29%
38%
Instability of U.S. economy 37%
27%
38%
I just haven’t found the home I want yet 29%
37%
34%
I’m worried that home values haven’t stopped dropping 24%
25%
29%
Trying to save more money 36%
29%
24%
Not sure about finances 26% Q2 2012
20%
24% Q1 2012
I’m not confident I can set the right price for my home 15%
20%
20% 2011
I’m nervous about having a new mortgage 16%
15%
18%
I’m worried about my job/employment 18%
13%
6%
Others 8%
11%
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13. Potential buyers and sellers have to be more careful
93% agree that the housing crisis reminded them to be more careful about buying or selling a
home, unchanged from the previous wave
The housing crisis reminded me that I have to be more careful
about buying or selling a home
Q2
2012 30% 37% 26% 4% 2%
Q1
2012 28% 37% 28% 5% 2%
Strongly agree Agree Somewhat agree Somewhat disagree Disagree
How strongly do you agree or All Recent Transactor Likely Transactor Contemplator
disagree with the following
statement: The housing crisis
reminded me that I have to be Q2 2012 Q1 2012 Q2 2012 Q1 2012 Q2 2012 Q1 2012 Q2 2012 Q1 2012
more careful about buying or
selling a home
TOTAL AGREE 93 93 92 93 94 94 99 92
Strongly agree 30 28 24 26 31 27 41 34
Agree 37 37 38 33 38 42 36 35
Somewhat agree 26 28 50 34 25 25 22 23
TOTAL DISAGREE 6 7 8 6 6 5 2 8
Somewhat disagree 4 5 5 4 5 4 1 7
Disagree 2 2 3 2 1 1 1 1
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14. Having a good agent is important
28% strongly agree that having a good agent can help them make the right choices when it
comes to buying a home, up 2 points from the first quarter
Having a good realtor can help me make the right choices
about the type of home and community I want
Q2
2012 28% 34% 28% 6% 3%
Q1
2012 26% 36% 29% 6% 3%
Strongly agree Agree Somewhat agree Somewhat disagree Disagree
How strongly do you agree or All Recent Transactor Likely Transactor Contemplator
disagree with the following
statement: Having a good realtor
can help me make the right Q2 2012 Q1 2012 Q2 2012 Q1 2012 Q2 2012 Q1 2012 Q2 2012 Q1 2012
choices about the type of home
and community I want
TOTAL AGREE 90 91 90 92 90 93 90 86
Strongly agree 28 26 29 29 29 27 23 17
Agree 34 36 35 35 35 37 30 36
Somewhat agree 28 29 26 28 26 29 37 33
TOTAL DISAGREE 9 9 9 8 9 8 9 15
Somewhat disagree 6 6 6 5 6 5 8 10
Disagree 3 3 3 3 3 3 1 5
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