Americans Haven’t Been This Optimistic About House Prices Since Just Before the Crash

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House prices are soaring and, despite warnings from some analysts, most Americans believe they will continue to soar.

A majority of U.S. adults (64%) continue to believe home prices in their local area will increase over the next year, a survey released Monday by polling firm Gallup concluded. That’s up nine percentage points over the past two years and is the highest percentage since before the housing market crash and Great Recession in the mid-2000s.

The level of optimism is edging closer to the 70% of adults in 2005 who said prices would continue rising. That, of course, was less than one year before the peak of the housing market bubble in early 2006, which was largely fueled by a wave of subprime lending. (Roughly one-quarter of respondents in both 2005 and 2018 said they believed house prices would remain the same.)

In 2009, during the depths of the Great Recession, only 22% of Americans believed house prices would rise. But optimism about the housing market has made a slow recovery—along with the market itself—in the intervening years. Today, only 10% in the Gallup survey believe prices will fall. That compares to 5% who felt similarly pessimistic in 2005, just two years before the crash.

Opinions vary between the West and East coasts, and renters and homeowners. Some 70% of homeowners see prices continuing to rise versus 59% of renters. Only 59% of Western residents see prices increasing, compared to a range of 65% to 68% in the other parts of the U.S. (The median sale price of a home in California is more than double that in the rest of the country.)

Gallup first asked members of the public their views about the housing market in 1978 and, over the last 40 years, the percentage of people saying it is a good time to buy a house has never fallen below 50%. Gallup notes that people likely answer the question in terms of both housing market conditions and their views about buying a house as a long-term investment.

“Along with 2006-2008, 1978 represented another low point,” the report said. “That year, interest rates on mortgages were around 10%. The all-time high percentage saying it is a good time to buy a house was 81% in 2003, when home prices were increasing rapidly and the federal government and banks were devising policies to increase home ownership.”

The property market has gained steam in the last 12 months. The national median list price now rests at $273,663, roughly 20% higher than in both March 2015 and March 2005. Between 2015 and 2016 the national median listing price only rose 4.8%, but rose by 7.4% over the last year. And yet some housing analysts are less optimisticthan many people surveyed by Gallup.

There are signs that the U.S. housing market could be overheating. The number of U.S. homes being flipped—bought and sold within a year—reached an 11-year high last year with more than 200,000 homes being flipped for second consecutive year, according to research firm Attom Data Solutions. Flipping peaked at 334,000 homes in 2005, again just before the market’s peak.

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