Optimism is usually a good thing. But for the housing market, this could lead to another housing bubble crisis. Results from Trulia's American Dream survey show that Americans are might be dreaming bigger than reality. "After years of broken housing dreams, it’s refreshing to see people voicing some optimism,” Jed Kolko, Trulia's Chief Economist, said in a statement. “But looking at our survey findings, the pendulum may have swung a little too far. Prices have started to turn around in most markets, but that doesn’t mean they’ll return to their pre-bubble highs in the next decade.”
Each quarter housing prices are rising in 86 of the largest 100 metros in the United States, these stats bring hope to many Americans.
In 2011, Trulia asked American's what would drive optimism. Lower foreclosures, more sales and lower vacancy rates were the three main criteria.
This year, all three criteria occurred:
Lower foreclosures and delinquencies - down 24 percent from the worst
More sales - up 23 percent from the worst
Lower vacancy rates - owner-occupied down 2.2 percent and rental down 8.8 percent, which is the lowest since 2002.
Because optimism is up, Americans are expecting a lot more this year than in 2011.
Housing super-size has returned. This year, 27 percent of those surveyed want a home 2,600 square feet or larger. This is up from 17 percent in 2011, according to the report.
Though more Americans are looking for their "bigger-is-better" home, many of those homes aren't for sale.
In Trulia's listings, 2,001 to 2,600 square footage homes make up 17 percent. This creates a long waiting list for the 25 percent that want a home of that size.
Unfortunately, only 8 percent of Americans want a 800-1,400 square-foot home. However, those homes make up 29 percent of homes listed.
Among the renters, 78 percent of them dream to be homeowners someday.
In 2011, 11 percent expected to move into a home by 13 to 24 months. This year, it was up 5 percent.
Those that expect to never buy a house was at 22 percent this year. This is down from 6 percent in 2011.
Many renters expect their first home to have all the bells and whistles that most people aren't able to get immediately.
Of the renters surveyed by Trulia, 62 percent hope to have an en-suite master bathroom, 50 percent aspire to have a gourmet kitchen and outdoor deck, and 47 percent hope to have wood floors.
In reality, 35 percent of first-home buyers will receive wood floors, but most other amenities won't be there.
Only 26 percent of first-home buyers had a en-suite master bathroom and 9 percent were able to entertain guests in their gourmet kitchen.
“As the economy recovers, people are dreaming bigger, but most won’t realize their dreams anytime soon,” Kolko said in a statement. “Few homebuyers – and even fewer first-timers – can afford 3,000 square feet and a gourmet kitchen. Buyers need to take a hard look at what they can actually afford, and give themselves some cushion in case a Euro crisis or federal budget battle pushes us back into recession.”
More than half of Americans expect local prices to return to their peak in 10 years. For the hardest-hit markets like Detroit, Las Vegas, Sacramento, buyers shouldn't count on it, Kolko said.
"Prices that we saw in some of the biggest bubble markets were a detour from the normal path of housing prices," said Kolko. "But still more than half the people in those markets expect prices to return to that peak. That's the kind of optimism that led us to the last housing bubble and if that kind of optimism persists it could lead us into the next housing bubble years from now."
Currently, the housing market is 37 percent of the way to normal, Kolko said. A normal number is the average number before the housing bubble.
In a closer look, sales are half-way back to normal. But, construction isn't even a quarter of the way back to normal.
Construction is typically slower because they want to make sure there is strong evidence that the market is tightening.
"When we see construction seriously rebounding, then we know that developers are conscious enough about the recovery to make clear bets on that recovery,' he said.
In April of this year, the housing market progressed 17 percent of the way back to normal from April 2011. At this rate, normalcy should arrive in 2016, according to Trulia.
"The recovery usually takes a couple steps forward with a couple steps back," Kolko said.
Currently, there are many risks to the housing recovery that Americans should keep in mind. This could continue to make recuperation even slower.
The euro zone crisis
Questions about the American budget
These factors could impact sales, construction, foreclosures delinquencies or prices.