Homeownership: Still the American Dream
Yesterday, Fannie Mae released their National Housing Survey for the second quarter of 2011. They survey the American public on a multitude of questions concerning today’s housing market. Each quarter, we like to pull out some of the findings we deem most interesting. Here they are for the most recent report:
Most Important Reasons to Buy a Home
When we talk about homeownership today, it seems that the financial aspects always jump to the front of the discussion. However, the study shows that the four major reasons a person buys a home have nothing to do with money. The top four reasons, in order, are:
- It means having a good place to raise children and provide them with a good education
- You have a physical structure where you and your family feel safe
- It allows you to have more space for your family
- It gives you control of what you do with your living space (renovations and updates)
The Home as an Investment
Though most people purchase a home for non-financial reasons, everyone realizes there is a money component to homeownership. Here is what they said on this issue:
- 65% of the general population (and 67% of homeowners) believe that homeownership is a ‘safe’ investment.
- 56% believe that homeownership has more potential as an investment than any other traditional asset class.
- 69% think that now is a good time to buy a home (this number has increased in each of the last two quarters)
Rent vs. Buy
We are always interested in the difference people see in renting vs. owning.
- 63% of renters have aspirations to someday own their own home
- 72% of renters think that owning is superior to renting
- 95% of homeowners see homeownership as a positive experience (4% see it as a negative experience) while 82% of renters see renting as a positive experience (17% see it as a negative experience)
- 96% of homeowners live in a single family residence while 46% of renters live in a multi-unit building
Bottom Line
Even in difficult times, Americans still realize the value of homeownership.
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Great article. In my Dallas market home ownership is so much better than renting. The cost of renting continues to rise while the cost of home ownership falls. Mortgage rates are very near record lows and qualifying for a mortgage is not that difficult. If we could just get the media off the negative spin, I think the housing market would rebound.
Home ownership will always be viewed by this generation as a goal to be achieved. I’m not convinced those 24-35 believe it’s the be-all-end-all safe investment their parents did. While I believe housing will always generate big numbers, I don’t see the US ever getting back to the levels seen in the early to mid 2000’s. Consider that in 2010 28% of all real estate transactions were distressed sales, what will that number be in 2011, what was it in 2009, 2008? My point is those former home owners will not be eligible for a mortgage for 5 years (generally speaking). Then include the folks around the country who are considerably upside-down in their mortgage (visit lps.com or corelogic.com for the sobering statistics) with not much hope for the requisite appreciation to allow them to move without taking a loss. The numbers are not pretty. So to say homeownership is something the majority wants is not enough to turn this market. Renters will make up 40% of the adult population before it’s all said-and-done, despite rising rents. A mix of rentals and sales should make up the business plan for those expecting to be successful in any real estate venture going forward.