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Rich Homeowners Bullish On Housing

According to a new survey released today, more than half of affluent homeowners expect their property value to appreciate at least somewhat during the next year, with one-tenth of respondents expecting significant gains. The Coldwell Banker Previews International Luxury Survey polled 301 homeowners with million-dollar homes (or $2 million in California) plus more than $1 million in investable assets. The study revealed 56% of the participants expect at least some gain in their property values during the next year, with 10% expecting significant gains. Further down the road, 58% expect some gain over the next 5 years, while 36% expect significant gains over the same period.

I don’t know about you, but I have a serious problem with this survey. Look closely at the number of homeowners surveyed- 301. Now, note that there are 1 million plus homes in the U.S. valued at over $1 million. Also, 4 million plus Americans have more than $1 million in investable assets. See the problem? Surely, such a small survey pool cannot accurately represent what is undoubtedly a significantly-larger demographic. Yet, we must remember that the survey was sponsored by Coldwell Banker, who understandably must pull out all stops to get Americans to start buying real estate again.

Maybe the survey respondents should take a closer look at what is actually going on in the housing sector. On March 29, 2007, Reuters released a piece entitled, “Mortgage crisis hits million-dollar homes.” The article noted that from January-March 2007, the percentage of foreclosures for U.S. homes valued at more than $750,000 climbed to 2.5%, the highest since early 2005 (when RealtyTrac began keeping data). At the time the article came out, California led the nation with 3,384 foreclosures of higher-scale homes since December, followed by Florida and New York.