COSTA MESA, Calif., Feb. 1 /PRNewswire/ -- According to the latest Experian-Gallup Personal Credit Index(SM) survey, nearly half of all consumers (47 percent) say they think a housing bubble and collapse of housing prices is very likely (16 percent) or somewhat likely (31 percent) in their local residential real-estate market within the next three years. This is up from the 37 percent of Americans who felt this way in May 2005 and the 42 percent voicing this opinion in April 2006. More information for the Personal Credit Index(SM) can be found at .
Fears of a potential housing price collapse are greatest in the West (52 percent) and the East (49 percent) but lower in the Midwest (41 percent) and the South (44 percent). Consumers with annual household incomes of $75,000 or more are somewhat less fearful of a collapse in housing prices (42 percent) than are those with incomes of $40,000 a year but less than $75,000 a year (50 percent) or those making less than $40,000 a year (48 percent). Renters think that such a drop in housing prices is more likely (57 percent) than do homeowners (43 percent).
"Housing market conditions may not have reached bottom at this point, with 57 percent of renters thinking there is the potential for a price collapse in their local areas over the next few years and 18 percent of all Americans expecting prices to decline during the year ahead," said Ty Taylor, president of Experian Consumer Direct. "Still, there is reason for optimism given the local nature of the residential real-estate market and the price resilience it creates, as reflected by the 47 percent of Americans who expect housing prices to increase over the next 12 months and the 33 percent who expect them to remain the same."
About one in five consumers (18 percent) think the average price of houses in their local area actually will decrease over the next year. This is up from just 5 percent who felt this way in May 2005 and 11 percent in April 2006. Expectations for a decrease in average housing prices are greatest in the West (23 percent) and the East (22 percent) -- areas experiencing the sharpest run-up in prices during recent years -- and less pronounced in the Midwest (16 percent) and the South (11 percent). Twenty percent of consumers with annual household incomes of $75,000 or more say they expect housing prices to decline over the coming year, compared with 18 percent of those with incomes of $40,000 a year but less than $75,000 a year and 15 percent of those making less than $40,000 a year.
One in four homeowners say they have a first mortgage and a home-equity loan and/or line of credit. One in three homeowners under the age of 50 have this combination of loans, compared with 25 percent of those 50 years of age but younger than 65. Only 8 percent of homeowners 65 years or older have a first mortgage and a home-equity loan/line. Thirty-six percent of homeowners with annual incomes of $75,000 or more have a first mortgage and a home-equity loan/line. One in four homeowners (24 percent) with incomes of $40,000 a year but less than $75,000 have this combination of loans. Only 15 percent of homeowners making less than $40,000 a year have such a loan combination.
Thirty-six percent of consumers say they obtained their home-equity loan/line to finance home improvements or repairs -- down from 43 percent in April 2006. Conversely, one in six consumers (17 percent) report obtaining a home-equity loan/line to pay off their credit cards and/or to consolidate their debts -- up from 14 percent in April 2006. One in five consumers with an annual household income of less than $75,000 a year got a home-equity loan/line to pay off their credit cards and/or consolidate their debt, while 14 percent of those making $75,000 or more report getting their home-equity financing for this same purpose.
"Given today's inverted yield curve and the comparatively attractive rates on home-equity loans/lines, it makes a lot of sense for consumers to use this type of consumer financing to pay off their credit cards, consolidate their debt and strengthen their personal balance sheets," said Dennis Jacobe, chief economist for The Gallup Organization. "Still, this degree of consumer debt restructuring combined with the deteriorating conditions in residential real estate and the finding that 22 percent of consumers say they remain uncomfortable with their level of debt suggests that consumer spending is likely to continue to decline during the first half of 2007."
About the Experian-Gallup Personal Credit Index
The Experian-Gallup Personal Credit Index is based on a monthly nationwide survey of households and measures four key areas related to credit: level of debt, monthly payment burden, credit rating and debt extension capability. The sampling was conducted in October, November and December 2006 and included 3,053 adults, age 18 and over, randomly selected from across the country. The sampling error is plus or minus two percentage points.
About The Gallup Organization
The Gallup Organization has studied human nature and behavior for more than 70 years. Gallup employs many of the world's leading scientists in management, economics, psychology and sociology. Gallup performance management systems help organizations increase customer engagement and maximize employee productivity through measurement tools, course work and strategic advisory services. Gallup's 2,000 professionals deliver services at client organizations, through the Web, at Gallup University's campuses and in 40 offices around the world.
About Experian
Experian(R) is a global leader in providing analytical and information services to organizations and consumers to help manage the risk and reward of commercial and financial decisions. Combining its unique information tools and deep understanding of individuals, markets and economies, Experian partners with organizations around the world to establish and strengthen customer relationships and provide their businesses with competitive advantage. For consumers, Experian delivers critical information that enables them to make financial and purchasing decisions with greater control and confidence. Clients include organizations from financial services, retail and catalog, telecommunications, utilities, media, insurance, automotive, leisure, e-commerce, manufacturing, property and government sectors.
Experian Group Limited is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. It has corporate headquarters in Dublin, Ireland, and operational headquarters in Costa Mesa, Calif., and Nottingham, UK. Experian employs more than 12,500 people in 34 countries worldwide, supporting clients in more than 60 countries. Annual sales are in excess of $3.1 billion.
The word "Experian" is a registered trademark in the EU and other countries and is owned by Experian Ltd. and/or its associated companies.
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