Few Discouraged from Homeownership

By:: Peter King | December 18, 2010

Despite plunging property values and waves of foreclosures, the housing crisis has discouraged few people from wanting to own a home, according to a recent study by Fannie Mae.

Fully half of those surveyed – 51 percent – said the housing crisis had little or no impact on their intentions to buy a home for their next residence. Of those who said it did have an effect, the number who said it made them more inclined to buy a home exceeded those who said it made them more likely to rent, 27 percent to 19 percent.

Even among homeowners in negative equity, those whose mortgage exceeds what their home is worth due to declining property values, there was a strong preference for home ownership. Thirty-four percent said the crisis made them more inclined to buy a home, versus 18 percent who were less inclined; for renters, the crisis had little effect, with nearly equal numbers more or less inclined to buy a home as a result of the crisis.

More expect to stay renters

At the same time, the number of people who expect to rent their next home actually increased during the year, to 33 percent of the general population, up from 30 percent in January. Among renters surveyed in the third quarter of the year, 59 said they expect to rent their next home, up from 54 percent at the start of 2010.

“Despite Americans' strong desire to own their homes, our study reveals that life events are greatly influencing families' decision to rent,” said Doug Duncan, Fannie Mae chief economist. “This trend, coupled with the housing crisis, has caused consumers to approach homeownership with greater caution and thoughtfulness.”

Of the major reasons cited by renters as barriers to home ownership, 52 percent said they did not think their credit would qualify them for a mortgage and 46 percent said they did not think they could afford to purchase and maintain a home. Forty-three percent said they simply did not think it was a good time to buy from an economic perspective.

The study said that overall U.S. homeownership rates have declined 3.3 percent from their peak in late 2004, to 66.9 percent in the third quarter of this year. Younger Americans have been most affected by the decline, with homeownership rates among those 25-29 falling by 10 percent, compared to 5 percent in the 35-44 year-old group and even less for those older.

The median home size has also declined by 6 percent since 2006, according to the survey.

The telephone survey was conducted in August and September, and involved approximately 3,500 persons in all.

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