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Does It Make Sense To Buy a Home?

The financial turmoil we have experienced over the last five years has definitely taken it’s toll. It has especially been a difficult time for real estate. Nationally, values have fallen over 25% and there may be more softening in prices to come. We realize that this has caused difficulty, and in some cases, heartbreak for many families. People unable to make their mortgage payments have been forced to sell or, even worse, have faced foreclosure.

However, the thing that has continued to amaze us is the country’s steadfast belief in the benefits of homeownership even in these most difficult of times. The vast majority of Americans still realize that the value of a family owning a home goes far beyond just the financial considerations.

There have been three major surveys done in the last 75 days delving into Americans’ current belief in the value of owning a home:

  1. The National Housing Survey by Fannie Mae this past November.
  2. The Housing Survey by the Gallup Organization completed last month.
  3. The American’s Attitudes About Homeownership (AAAH) study completed by Harris Interactive for the National Association of Realtors.

Each showed the country still believes that buying a home makes all the sense in the world. Let’s consider some of the findings:

Is owning a home good for a family?

  • In the AAAH study, 87% of homeowners and 64% of renters believed that “owning a home provides a healthy and stable environment for raising a family”.
  • The Fannie Mae study showed that the main reason people gave for buying a home is that “it is a good place to raise children and provide a good education”.

Has owning a home been a positive experience?

  • AAAH: The study shows that an astonishing 88% say it has been “a positive or very positive experience”. An overwhelming majority of home owners are happy with their decision to own a home. A full 93% of owners surveyed would buy again.
  • Fannie Mae: The study shows that 95% see homeownership as a “positive experience” for them and their families.

Do renters aspire to own a home?

  • AAAH: Most renters aspire to home ownership. The majority of renters (63%) say they are at least somewhat likely to purchase a home at some point in the future. Among them, young adults (18- to 24-years-old) have the strongest aspirations for home ownership.
  • Fannie Mae: 67% of renters plan to purchase a home in the future.

Is now a good time to buy a home?

  • AAAH: 78% of homeowners and 58% of  renters believe now is a good time to buy.
  • Fannie Mae: 64% of those surveyed said it is a good time to buy a home.
  • Gallup Poll: 67% of Americans think now is a good time to purchase a home.

Bottom Line

Survey after survey report Americans believe two things: that there is a value in owning a home and that now is the time to buy!! What are you waiting for?


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6 replies
  1. David Mott
    David Mott says:

    It seems that in the past couple of years, at least one article has appeared online daily that predicted housing prices will continue to fall into a bottomless pit: we are horse whipped doomed to death and there is no hope for anyone ever again. Run away from home ownership as fast as you can! Go find a rental to stay in from some fool that hasn’t sold yet.

    Of course there were some overheated real estate markets, but for some reason the articles made folks wary of real estate in their own home towns. Some people are selling so they won’t lose anymore equity. Some folks are short selling, taking their equity lines and their new boats, cars, and RVs with them. I’ve heard of folks hiding their money with relatives so they can short sell. This might be your neighbor.

    It doesn’t help matters that mortgage lending has tightened. What investor wants to invest in a 30 year mortgage at less than 5%, when inflation is predicted to spring upon us like a coiled snake?

    I had a 13% interest mortgage loan back in the early 80’s. Will we revisit these times?

    The smart people aren’t selling. If need be, they are renting out their property to the same folks that have already sold that need a place to stay while the renters are waiting for the market to officially bottom. If you are one of these renters and have plenty of cash and don’t need a mortgage, good for you. Otherwise, you just reset the clock on the (now mostly) interest payment you will be making towards your new mortgage.

    Meanwhile, google ‘us population chart’ . This line will never dip down like a stock market index, muni-bond index, or gold price. Over time, this line turns up dramatically (look at a chart of an exponential function). With new construction pretty much on hold, pent up demand is building.

    Reply
  2. Rob Jenson
    Rob Jenson says:

    I agree. I’m disclosing that I’m a Realtor. Here are my thoughts. Nobody really did a good job of predicting the peak (except hedge fund guy Paulson) and I doubt anyone is going to accurately call the bottom. Homes provide value & if you are going to be financing a home, today’s lower interest rates will save you a lot more money in the long run, even if prices drop another 10% this year. Interest rates will go up, it’s just a matter of when.

    Reply

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