Stagnant and plummeting home values and sad stories of distressed homeowners have created a more cautious approach to homeownership, yet there still remains a positive attitude about the emotional and financial benefits of buying a home, according to several recent national surveys measuring consumer attitudes about housing issues.
The surveys reveal that while renters are not necessarily planning to purchase a home in 2010, there still is a general sense that buying a home is a valuable long-term investment.
The Fannie Mae National Housing Survey, conducted in December 2009 and January 2010, polled 908 renters and 2,543 homeowners and discovered that 65 percent prefer owning to renting.
“Overall, we are seeing a rebalancing of attitudes about homeownership versus renting,” says Steve Deggendorf, director of strategic planning for Fannie Mae. “While there is a surprisingly strong positive attitude toward homeownership even among underwater borrowers [those who owe more on their mortgage than their home is worth] and distressed owners, it is clear that nonfinancial reasons to own have eclipsed financial reasons.”
The National Apartment Association’s (NAA) survey, conducted in May with 1,443 homeowners and 617 renters, found that 76 percent of respondents deemed renting to be a more favorable option in the current real estate market than owning a home. This figure represents an increase of 5 percent compared to responses in a 2008 survey.
“Our survey showed that the main reason people prefer to rent is to avoid responsibility for major repairs or maintenance,” says Paul Bergeron, director of communications for NAA. “People also cited financial reasons such as not being impacted by an unpredictable real estate market and not being susceptible to foreclosure. Renters have a big advantage in this economy because they have flexibility to move if they need to in this job market. They can end their lease or take a short-term lease and not have the stress of selling a home.”
The NAA survey showed that 60 percent of renters intend to continue renting for at least the next year. Twelve percent plan to buy a home this year.
The Fannie Mae survey showed renters often still want to own a home but are concerned about affordability and financial uncertainty.
“In the current economy, renters are more likely to rent again, at least for the short-term,” Mr. Deggendorf says. “We are in a dynamic period and we recognize that attitudes translate into behavior, so we will continuously look at trends in future surveys, particularly to see if consumers demonstrate a preference for homeownership or renting. In the current survey, even people who are underwater and those who are delinquent in their payments expressed a preference for owning a home.”
The Fannie Mae survey asked respondents whether “owning makes more sense because you’re protected against rent increases and owning is a good investment over the long term.” Seventy-five percent of renters agreed with that statement, while 20 percent agreed that “renting makes more sense because it protects you against house price declines and is actually a better deal than owning.”
Locally, Realtor Karen Hall of Century 21 New Millennium in Alexandria, Va., says a “feeding frenzy” is taking place in the Washington real estate market.
“Everyone seems to be trying to buy now in order to take advantage of low interest rates and relatively lower prices,” Ms. Hall says. “The expectation is that prices have stabilized or are starting to increase again. Buyers are motivated because they have a general sense that prices are good, especially compared to 2004 to 2006.”
Ms. Hall says low interest rates are encouraging some buyers to look at homes in a higher price range than they anticipated.
“When they realize that the monthly payment for a $500,000 home is the same as the monthly payment would have been a few years ago for a $350,000 home, buyers are often motivated to bump up their price point a little,” she says.
Ms. Hall says the buyers she works with are interested in owning for the pride of homeownership and because they like the idea of paying down the mortgage rather than paying rent to someone else. In some cases, they have found that owning a home costs the same or even less each month than renting.