A majority of Americans expect the drop in home prices which began in 2007 and has occurred each year since then to continue in 2011. This is not surprising. S&P recently wrote that the average price of homes could fall by 7% to 10% this year. Research firm RealtyTrac reported a record number of foreclosures last year, which means the inventory of house for sale will rise.

According to a new Gallup poll, Americans believe that it is currently a good time to buy a home, but Gallup does not indicate whether that will translate into sales.

The research shows that 67% of Americans feel now is a “good time” to buy a house — similar to the 72% of April 2010 and the 71% of April 2009. The findings, from a Gallup poll conducted Jan. 7-9, 2011, suggest Americans are holding on to perceptions of a buyer’s market despite the challenges of securing financing and observers’ concerns about the potential for a housing “double-dip.”

Beliefs do not always turn to into actions, and that is probably the case with the slight improvement of the view Americans have of the housing situation. Logic would say that low interest rates show that homes are a good long-term investment. There is a strong case to be made that a decade from now the inventory of  unsold new homes built in the 2005 and 2006 period will have begun to fall as buyers take advantages of bargains. The same can be said for inventories of homes in foreclosure which often sell for 30% below the prices of similar homes in nearby neighborhoods.

But, many people still think the economy is still in a recession. Even Fed Chairman Ben Bernanke has said it could take another three years for unemployment to reach “acceptable” levels. Under those circumstances it will be difficult to lure buyers back into a batter housing market.

Finally, the government has done nothing effective to aid the home buying market since tax credits expired nearly a year ago. The tax program worked well, but the current Congress, with its supposed distaste for larger deficits, is not likely to add another set of tax credits, which could cost billions of dollars.

Americans like the idea of buying a home, but like is as far as it gets.

Methodology–Results for this Gallup poll are based on telephone interviews conducted Jan. 7-9, 2011, with a random sample of 1,018 adults, aged 18 and older, living in the continental U.S., selected using random-digit-dial sampling.

Douglas A. McIntyre

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