Homeownership Aspiration Remains Strong Among Americans
A new study released recently by Fannie Mae finds that most Americans strongly aspire to own a home and to maintain homeownership, despite ongoing turmoil in the housing market. However, demographic trends such as fewer married couples and less families with children resulting in shrinking households, combined with financial caution among consumers, are contributing to an increased willingness to rent.
According to the study findings, 51 percent of current owners and renters say that the housing crisis has not affected their overall willingness to buy a home. However, while homeownership aspirations are high for the long-term, Americans have near-term doubts about buying. Overall, according to Fannie Mae’s National Housing Survey third quarter results, one-third of Americans (33 percent) would be more likely to rent their next home than buy. Among renters, 59 percent said they would continue to rent in their next move, compared to 54 percent in January 2010.
Fifty-one percent of those surveyed reported the housing crisis had little or no impact on their intentions to buy or rent, versus 27 percent who said they are more likely to buy and 19 percent who said they are more likely to rent.
The substantial majority of homeowners (89 percent), as well as nearly half of renters (44 percent) believe they would be better off owning their homes, given their current financial situations.
Lifestyle considerations are more likely to influence consumers’ decision to buy a home, while the decision to rent is driven primarily by financial considerations. More than half (57 percent) of renters believe financial benefits are the best reason for renting a home. Based solely on current household finances, 52 percent believe they are better off renting, compared to 24 percent among the population at large. From January 2010 to third quarter 2010, the percentage of renters who say they will probably continue to rent in their next move increased from 54 percent to 59 percent.
Per Fannie Mae calculations, 64 percent of renters who do not plan to own and half (50 percent) of those who do plan to own probably do not have sufficient income to qualify for the mortgage on a median-priced home.
Single (unmarried) respondents are least likely to own and report the lowest level of satisfaction with their housing choices. After controlling for age, income, wealth and a number of other factors, regression analysis indicates that married/partnered couples are 2.5 times more likely to own than other respondents. Respondents with children generally have higher homeownership rates than those without children after controlling for age and income, and having children is cited as a major reason to buy a home by approximately three quarters (76 percent) of the general population.
Americans 50 and older are more likely to believe they are better off owning than renting than any other age group, and are increasingly able to realize homeownership aspirations as they age. A person age 65-74 is 3.5 times more likely to own than a person under 25.
The housing crisis has had the greatest impact on younger Americans. Since the housing crisis, homeownership for those 25 to 29 years has declined 11 percent since peak rates, compared with a decline of 5 percent among those 35 to 44 and less for those 45 and older.
Married couples, statistically most likely to own a home, represent a shrinking portion of the population– 50 percent of households in 2009, compared with 56 percent in 1990. Although having children increases consumers’ propensity to own a home, renters are more likely than owners to have children under 18 living at home. In particular, 58 percent of single mothers rent, versus 32 percent overall for households with children under the age of 18. The percentage of families with children is declining overall, and reached an all-time low of 45 percent in 2009.