Quarterly National Housing Survey

Consumers Who Know a Defaulter are Pessimistic about Personal Finances, but Still Motivated to Own a Home

Pete Bakel

202-752-2034

WASHINGTON, DC – Fannie Mae's (FNMA/OTC) third quarter National Housing Survey provides in-depth findings on attitudes of consumers who know of people in their area or neighborhood who have defaulted on their mortgage. This latest survey shows that those exposed to default have similar attitudes about buying a home as those who do not know people that have defaulted.  However, the survey also finds greater pessimism about the economy and personal finances among consumers who know defaulters.

"Knowing someone who has defaulted on their mortgage appears to be correlated with consumers being slightly more pessimistic about the direction of the economy, their finances, and their ability to obtain a mortgage, but does not materially correlate with their desire to own a home or their view of housing as a safe investment," said Doug Duncan, vice president and chief economist of Fannie Mae.

"At the macro level, we see that economic activity picked up in the third quarter, thanks to a sizable rebound in consumer spending on services. However, the hike appears to have come out of consumers' savings, as disposable income fell during the quarter," continued Duncan. "The improvement in consumer spending has not spilled over into big-ticket items such as housing, as consumers' concerns over their finances and dissatisfaction about the direction of the economy remains elevated."

Owners and Renters who know defaulters are as likely to say owning makes more sense than renting, say buying a home is a safe investment and display roughly the same intention to buy a home as those who do not know a defaulter.

• Ninety-two percent of Owners who know defaulters say owning makes more sense than renting, compared to 89 percent of Owners who do not know defaulters.
• Sixty-seven percent of Owners and 52 percent of Renters who know defaulters say buying a home is a safe investment, compared to 70 percent of Owners and 52 percent of Renters who do not know defaulters.
• Seventy-eight percent of Owners and 39 percent of Renters who know defaulters say they are likely to buy their next home, compared to 73 percent of Owners and 35 percent of Renters who do not know defaulters.

However, the survey also finds higher levels of pessimism on several measures related to the broader economy and personal financial prospects among consumers who know people that have defaulted:

• Eighty percent of Owners and 74 percent of Renters who know defaulters say the economy is on the wrong track, compared to 75 percent of Owners and 70 percent of Renters who do not know defaulters.
• Twenty-two percent of Renters who know defaulters expect home prices to increase over the next 12 months, compared to 29 percent of Renters who do not know defaulters.
• Six percent of Owners who know defaulters have seriously considered defaulting on their own mortgage, compared to 3 percent of those who do not know defaulters.
• Nine percent of Owners and 21 percent of Renters who know defaulters are very stressed about their ability to make payments on their debts, compared to 4 percent of Owners and 12 percent of Renters who do not know defaulters.

The third-quarter survey also provides comprehensive data based on more than 3,000 interviews among homeowners and renters to assess their attitudes toward owning and renting a home, confidence in homeownership as an investment, the current state of their household finances, views on the U.S. housing finance system, and overall confidence in the economy. Interviews were conducted by Penn Schoen Berland, in coordination with Fannie Mae.

For more detailed findings from the survey, click here.