National Housing Bubble
Will Burst, Consumers Say

More than 70% of U.S. consumers believe a national housing bubble will burst and home prices will collapse within the next year, although 56% believe it's unlikely to happen in the area where they live, according a new survey.

The Experian-Gallup Personal Credit Index study, released yesterday, found that 71% of the 1,004 adults surveyed believe a bubble exists and could burst within the next 12 months. Only 24% believe it's unlikely to happen and 5% said they didn't know.

However, most consumers don't think it will happen where they live -- at least not in the next three years. The survey found 56% believe it's unlikely to occur in their residential area, while 42% believe it could happen and 2% didn't know. The survey found that 32% believe a bubble exists and will burst in their neighborhood in the next 12 months.

Dennis Jacobe, Gallup Organization's chief economist, said the results reflect public perception about a national housing bubble and news of sharp price increases in certain markets.

Hype and Hot Markets

"I think they hear hype and the stories of prices that have increased in the hot markets," such as Manhattan, Washington, D.C., Miami, Las Vegas, San Francisco and Los Angeles, said Mr. Jacobe. "They just don't think it's able to continue."

However, people in the Midwest and in smaller towns and cities haven't seen the same price surges and therefore don't think the bubble will affect them locally, he said.

"In Lincoln, Nebraska, or Omaha, Nebraska, or those kinds of places, you don't see the same kind of escalation in prices and therefore don't see the same potential for bust," Mr. Jacobe said.

The survey found that more than half of all Americans -- 53% -- recognize the term "housing bubble" without an explanation, up from 35% a year ago.

When it comes to loans, only 15% believe it's a good time to borrow money, down from 20% a month ago, and 24% a year ago.

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