Quarterly National Housing Survey

Attitudes About Homeownership as an Investment, Financial Constraints, and Mortgage Accessibility May Stand in the Way of Americans' Purchase Decisions

Pete Bakel

202-752-2034

WASHINGTON, DC – Fannie Mae's (FNMA/OTC) latest quarterly National Housing Survey focuses on the state of homeownership aspirations among Americans across all demographic groups. The survey finds that despite the recent housing crisis, most Americans continue to believe that owning their home is preferable to renting it. The data also indicate that while financial constraints and employment concerns may be keeping potential homebuyers on the sidelines in the near term, future improvements in employment and personal finances, a pickup in interest rates in response to stronger economic growth, and stabilizing home prices may move Americans to act on their aspirations in coming years.

• Across all education levels, Americans say owing makes more sense than renting.  This belief is held consistently across all demographic groups.
• Nearly two-thirds of current renters say that they will buy a house at some point in the future.
• Non-financial factors such as safety and quality of local schools continue to be the top reasons for buying a home across all income groups.
• African-Americans and Hispanics are more likely to cite various benefits, such as buying a home as a way to build wealth, homeownership as a symbol of success, and civic benefits.

“In spite of the impact of the housing crisis on home values and homeownership rates across the country, Americans by and large still hope to become homeowners,” said Doug Duncan, vice president and chief economist of Fannie Mae. “Some may not be financially positioned to own a home in the near future, but Americans may begin to revisit that aspiration as employment and household balance sheets improve over the coming years.”

“A point of concern for the industry is that some consumers find the mortgage shopping process difficult to navigate,” Duncan continued. “If potential homeowners avoid the process because they believe it to be too complex, we will likely see a continued impact on homeownership rates.”

Overall, certain groups (renters, those with lower levels of education, people with lower incomes, African-Americans, and Hispanics) cite potential difficulties in getting a mortgage. Specifically, those renting today are most likely to cite poor credit, complexity of process, and bad economic times as major reasons not to buy a home.

• Renters are consistently more likely than mortgage borrowers to think it would be difficult for them to get a home.
• African-Americans and Hispanics are more likely to indicate that getting a mortgage is difficult, regardless of income level.
• Groups with lower levels of education are more likely to say it would be difficult for them to get a mortgage than groups with higher levels of education.
• Renters cite financial reasons as the major factors for not buying a home.
• Hispanic and African-American renters are most likely to cite bad economic times and overall complexity of process as major reasons not to buy a home.
• Lower income Americans also are consistently more likely to cite income and credit history as obstacles to getting a mortgage, and are less confident they are getting adequate home loan information.
• Hispanics are less confident than other groups about receiving information they need to choose the right mortgage.

Moreover, attitudes about homeownership as an investment, financial constraints, and mortgage accessibility may mean that more Americans choose not to act on their aspiration for homeownership, thus potentially leading to lower homeownership rates.

• The margin of Americans believing homeownership has the highest investment potential has declined over the past several years.
• At the same time, the perceived safety of owning a home as an investment has trended downward, reaching a low of 63 percent in the fourth quarter of 2011.
• In turn, groups with higher levels of education and higher incomes are more likely to think buying a home is a safe investment.

The fourth-quarter 2011 National Housing Survey focus on the state of homeownership aspiration is based on more than 3,000 interviews from October 3, 2011 to December 20, 2011 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. Data findings for this topic also are based on similar surveys conducted throughout 2011, 2010, and in December 2003. Interviews were conducted by Penn Schoen Berland, in coordination with Fannie Mae.

For more detailed findings from the survey, click here.