National Housing Survey: Homeowners Adopting Realistic Long-Term Perspective

Americans are still committed to owning their own home, but are rebalancing their attitudes. In summarizing the findings of FannieMae's National HousingrnSurvey, released on Tuesday, Doug Duncan, VicernPresident and Chief Economist for Fannie Mae said:

“Consumers are still committed to owning a home, but are showing increased cautiousness, regardless of whether they rent, own their homes outright or have a mortgage. They are rebalancing their attitudes toward housing and homeownership by adopting a more realistic, long-term approach, and are less willing to take risks. This focus on sustainable housing is better for the economy, better for the housing market and better for America’s families.”

The survey was conducted over a 30 day period in December and January in anrnattempt to gauge the public's current attitudes toward housing, especially inrnlight of the current housing crisis. rnOver 3,000 consumers was asked about their confidence in homeownershiprnas an investment, the current state of their household finances, their views onrnthe U.S. housing finance system, and their overall confidence in the economy.  Respondents included both homeowners andrnrenters and included subsets of mortgage borrowers, and borrowers who arernunderwater on their current mortgages. rnAn additional random oversample of 400 persons who were 60 or more daysrndelinquent on their home mortgage was also surveyed.

The survey's key findings were:

1.   Most Americans are pessimistic about the economy, but more optimisticrnabout their personal finances. 

2.   Americans are stressed about their debt and most think theirrnsavings are insufficient.

3.   80 percent of respondents believe homeownership is important to the economy butrna majority view it as a growing challenge.

4.   Nearly two-thirds of respondents think owning is better thanrnrenting.

5.   80 percent of Americans are confident they would get the necessaryrninformation if they were buying a home today.

6.   A majority of mortgage borrowers are satisfied with the featuresrnof their current mortgage.

7.   Being underwater has a significant impact on borrower attitudesrnand behaviors

8.   Most borrowers feel that it is not acceptable to stop makingrnmortgage payments, however, this attitude can be swayed by social forces.

A majority, 61 percent, of respondents feel that the economic is on thernwrong track yet the overwhelming majority was upbeat about their own situation.  38 percent of respondents felt that theirrnsituation would remain the same while 44 percent expected it to get better.  Renters were more optimistic about theirrnpersonal finances (56 percent) than were homeowners or mortgage holders whilernthose in both categories who also expected housing prices to rise were even morernoptimistic.  Surprisingly, delinquentrnborrowers are more upbeat about their future finances than the generalrnpopulation; 63 percent felt their financial situation would improve in the nextrnyear.

One out of three participants reported that they werernstressed about their ability to pay their debt and that they did not havernsufficient levels of savings.  This findingrnwas particularly true of borrowers who were delinquent on their existingrnmortgages.  85 percent reported that theyrnwere particularly stressed and 86 percent said they did not have sufficientrnsavings.

Two out of three Americans think that it is a good time to buy a home – a numberrnthat matches responses in a similar survey in 2003 – and 31 percent feel thatrnit is a very good time to buy.  73rnpercent feel that prices will not decline further, a response about equallyrndivided with 37 percent feeling that prices will go up in the next year and 36rnpercent expecting them to remain the same.

70 percent of the survey's respondents said that buying a home continues tornbe one of the safest investments.  To putrnthis in context, 74 percent ranked a bank account as a safe investment whilernonly 17 percent had a similar view of investing in the stock market.  This is down from 83 percent who viewedrnhomeownership as a safer investment than a bank account in 2003. 

65 percent would prefer owning a home to renting with 43 percent saying thatrnsafety and 37 percent calling school quality the drivers behind that preference.rnBoth reasons ranked higher than any economic considerations.

Renters are happy with their situation, with 79 percent saying that rentingrnhas been positive for them and their families. rnStill, 75 percent feel that owning makes more sense than renting becausernit protects them from rent increases and is a good investment over the longrnterm.  The reasons that most renters,rnhowever, have not purchased is the belief that their credit historyrndisqualifies them (54 percent) or that they might not be able to afford thernpurchase and upkeep of the home (47 percent). rnNearly seven in ten, however, plan to eventually purchase a home.

60 percent of all respondents think it is harder to buy a home today than itrnwas in their parent's generation and 68 percent say it will be even harder forrnthe next generation.  Poor credit wasrncited by 22 percent as a stumbling block to getting a mortgage; lack of incomernwas named by 19 percent while job security and lack of down payment were reasonsrngiven by 15 percent each.

Current mortgage borrowers tend to be satisfied with their mortgages, butrnthat satisfaction is strongest among holders of fixed rate mortgages.  While 90 percent of all participantsrnexpressed satisfaction the numbers break down to 93 percent of those with fixedrnrates mortgages but only 76 percent of hybrid adjustable rate mortgage holdersrnand 68 percent of adjustable rate mortgage borrowers.

Americans hold some divergent views on borrower responsibility.  Three quarters of those holding a mortgagernsay that, in the event of financial difficulties, they would try to keep payingrntheir mortgage before they would pay other bills like credit cards andrnutilities.  However, 42 percent ofrndelinquent borrowers would put the mortgage payment behind other bills.  88 percent of all borrowers (and 70 percentrnof delinquent ones) do not believe it is acceptable for people to stop makingrnmortgage payments solely because their mortgage is underwater while 8 percentrnfelt it was acceptable.  When thernquestion was changed to include financial distress on the part of the borrower,rn15 percent ten felt it was acceptable to stop making payments    

Americans are split on whether banks should foreclose on delinquentrnborrowers; 48 percent said yes, 43 percent said no.  53 percent, however, feel that homeowners arernresponsible if they buy a home they can't afford.

Borrower attitudes toward mortgage payments seem to have a socialrncomponent.  When asked about thernmotivation for paying their mortgage 35 percent cited a negative impact on theirrncredit score and 33 percent said moral qualms. rnThere is also what Fannie Mae calls a “contagion effect) withinrncommunities.  Both delinquent andrnnon-delinquent borrowers were more than twice as likely to have seriouslyrnconsidered stopping payment on their mortgages if they knew someone who hadrnalready defaulted.

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