The Official Online Weekly Newspaper of NAHB
In a new national survey from Fannie Mae on attitudes toward housing, two-thirds of Americans (65%) say they still prefer owning a home, despite today’s more challenging economic environment and the housing downturn.
"Despite the recent downturn in the housing sector, Americans continue to value homeownership and think about their homes in ways that go much deeper than the financial investment," said Mike Williams, president and CEO of Fannie Mae. "The public also strongly believes in the importance of upholding the financial commitment involved in buying and owning a home, even during these challenging times when home values have fallen."
The survey, released on April 6, revealed that home owners and renters alike are taking a more cautious approach to homeownership. Nearly a quarter of renters polled (23%) say they will buy a home later than once planned. In addition, Americans with traditional, fixed-rate mortgages with predictable payments are significantly more satisfied than those with other types of mortgages. Respondents cited non-financial reasons such as safety (43%) and quality of local schools (33%) as driving factors in wanting to own a home, ahead of financial considerations.
"Consumers are still committed to owning a home, but are showing increased cautiousness, regardless of whether they rent, own their homes outright or have a mortgage," said Fannie Mae Chief Economist Doug Duncan. "They are rebalancing their attitudes toward housing and homeownership by adopting a more realistic, long-term approach, and are less willing to take risks. This focus on sustainable housing is better for the economy, better for the housing market and better for America's families."
A majority of consumers (60%) believe that buying a home today is harder than it was for their parents, and nearly seven in 10 (68%) think it will be even more difficult for their children. Most respondents (88%) also believe that walking away from an underwater mortgage is not acceptable, but those who know someone who has defaulted are more than twice as likely to have seriously considered stopping payments on their mortgage.
Following are key findings from the survey:
- Eight in 10 respondents consider homeownership important to the economy.
- Only 31% think that the economy is on the right track, but 44% expect their personal financial situation to improve in the next year. Delinquent borrowers are even more optimistic about the future, with 63% expecting to be in a stronger financial position in the next year.
- Nearly two-thirds of respondents (64%) think it is a good time to buy a house, and nearly one in three (31%) think now is a very good time to buy a house. This is nearly as many as those who said it was a good time to buy in 2003 (66%), well before home prices peaked.
- Nearly three-quarters (73%) think housing prices will go up or stay the same over the next year, including 37% who think prices will increase and 36% who feel prices will remain about the same.
Desirability of Homeownership
- Seven out of 10 respondents (70%) said they believe buying a home continues to be one of the safest investments available. This compares to 74% who think putting money into a bank account (money market or savings account) is safe. In contrast, only 17% believe buying stocks is a safe investment.
- Nearly two-thirds (65%) of survey respondents prefer owning to renting, citing non-financial reasons such as safety (43%) and quality of local schools (33%) as driving factors in wanting to own a home, ahead of economic considerations.
- Americans with 30-year fixed-rate mortgages are significantly more satisfied (93%) than those with other types of mortgages (76% for those with hybrid ARMs and 68% for those with ARMs).
Renters' Views on Renting and Homeownership
- Nearly eight in 10 renters (79%) participating in the survey believe that renting has been positive for them and their families.
- The two most common reasons cited by renters for choosing to rent instead of buy are: the belief that their credit history is not good enough to qualify for a mortgage (54%) and that they would be unable to afford the purchase or upkeep of a home (47%).
- Nearly seven in 10 renters (67%) plan to buy a home at some point in the future.
- Less than half (44%) of those who currently rent said they would buy a house if they were to move, and 23% said they would purchase a new home later than they planned.
Challenges Facing Home Owners
- Most respondents (60%) believe it is harder for them to get a mortgage in order to purchase a home than their parents. Nearly seven in 10 (68%) think it will be harder for the next generation.
- Survey respondents cited poor credit (22%), their income (19%), job security (15%) and having enough for a downpayment (15%) as the top obstacles to obtaining a home loan.
- The majority (76%) expressed some degree of confidence that they would receive the information they needed to choose the right loan if they bought or refinanced a home today, although only 47% said they were "very confident."
Attitudes About Delinquency
- Nearly nine in 10 (88%) — including seven in 10 who are delinquent on their own mortgages — do not believe it is acceptable for people to stop making payments on an underwater mortgage, while 8% believe it is acceptable.
- However, when asked if financial distress makes stopping payments on an underwater mortgage acceptable, 15% of respondents said yes, or nearly double the 8% who believe it is acceptable generally.
- Both delinquent mortgage borrowers and those current on their mortgage payments are more than twice as likely to have seriously considered stopping their payments if they know someone who has already defaulted.
For more information about the survey, click here.
The 2010 Spring Construction Forecast Conference is now a two-hour webinar to be held from 2:00-4:00 p.m. EDT on Tuesday, May 18.
Mark Zandi, of Moody’s Analytics, and Chris Varvares, of Macroeconomic Advisers, will join NAHB Chief Economist David Crowe for a macro-level look at the state of the nation’s economy and its impact on housing.
To register, visit www.nahb.org/cfc.