Homeownership: Still Part of the 'American Dream' for ManyBy Meredith Dunn, Research Communications Manager, NATIONAL ASSOCIATION OF REALTORS® The housing market has faced some unique hurdles in the past year: tight inventories in some areas, affordability issues, credit availability, and more. Despite this, the desire to own a home remains strong. According to the Housing Opportunities and Market Experience (HOME) report, released by the National Association of Realtors® (NAR) last month, 88 percent of U.S. households believe owning a home is a good financial decision.
This new report examines consumer sentiment regarding the housing market and tracks changes in sentiment on a monthly basis. The questions asked give insight into what homeowners and potential homeowners are experiencing, and include such topics as whether or not now is a good time to buy a home, whether they plan to own in the future, and whether owning a home is still part of their “American Dream.” The answer for many appears to be “yes.” Eighty-seven percent of U.S. households believe that homeownership is part of their “American Dream.” Of those who answered in the affirmative, 72 percent believe this strongly and 15 percent moderately believe. Older households are more likely to see homeownership as a good financial decision, with those over 45 more widely believing this to be the case (see the chart below). In addition, while 44 percent of surveyed households believe the economy is still in a recession, 87 percent of those who do also believe that owning a home is part of their “American Dream.” The attraction of homeownership is both practical and emotional: the most appealing aspects were a place to raise one’s family and owning a place of one’s own at 36 and 26 percent respectively. The desire to own a home is strong in potential homeowners as well: 83 percent of current renters do want to own a home in the future. Those 34 and younger are most likely to aspire to be homeowners at 94 percent. However, affordability is often the biggest constraint that renters face on the road to homeownership: the largest group, at 53 percent, feels they simply can’t afford to buy. In this vein, the first-time buyer share has fallen. According to the NAR 2015 Profile of Home Buyers and Sellers, the share of first-time buyers was down to 32 percent last year, close to the low of 30 percent not seen since 1987. This share of buyers is also facing financial constraints and the desire to put off ownership. Difficulty in obtaining a mortgage is another obstacle that may hold renters back: 65 percent think it would be at least somewhat difficult to get a mortgage, with 31 percent believing it would be very difficult. While only 5 percent have tried recently to obtain mortgage financing and failed, 51 percent believe they could not obtain one (even though they have not tried recently). There are also differences among income brackets: renters who make between $30,000 and $40,000 annually had the highest share that tried and failed to obtain a mortgage at 10 percent, while 51 percent of those who make more than $50,000 a year have not tried but feel confident they could succeed in obtaining a mortgage. For those who do become homeowners, the move to ownership happens not just for financial reasons. Thirty-five percent bought because of lifestyle changes such as getting married, starting a family or retiring. Eighteen percent wanted to settle in one location and 15 percent became owners due to an improvement in their financial situation. However, the reasons for becoming a homeowner vary significantly by age group (see the chart below). For example, the 65-and-older group is much more likely than any other age group to buy due to lifestyle considerations at 55 percent. The 45-54 group is more likely than other age groups to purchase due to an improvement in their financial situation, while the 35-44 group is more likely than other groups to purchase because of the desire to settle in one location. Finally, owners are more likely than renters to believe that now is a good time to buy a home. Eighty-two percent of owners believe now is a good time to buy compared to 68 percent of renters. In comparison, only 61 percent of current owners believe now is a good time to sell a home. Perhaps this is partly influenced by the uncertainty about rising home prices. Forty-two percent of respondents believe that prices will rise in the next 6 months in their community, while 9 percent believe they will decrease and 49 percent believe prices will stay the same. Those who believe the economy is either not in a recession or is improving are more likely to feel that home prices are improving. Forty-seven percent of those who think the economy is not in a recession, compared to 37 percent of those who do, also believe home prices will increase, while 50 percent of respondents who believe the economy is improving believe that home prices will increase (compared to 34 percent who believe the economy is not improving). The HOME Report is a quarterly report from NAR. The next release will be March 15, 2016. The full report can be read here. Meredith Dunn is the research communications manager for the National Association of Realtors®. |