Americans are still committed to owning their own home, but are rebalancing their attitudes. In summarizing the findings of Fannie Mae's National Housing Survey, released on Tuesday, Doug Duncan, Vice President 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 an attempt to gauge the public's current attitudes toward housing, especially in light of the current housing crisis. Over 3,000 consumers was asked about their confidence in homeownership as an investment, the current state of their household finances, their views on the U.S. housing finance system, and their overall confidence in the economy. Respondents included both homeowners and renters and included subsets of mortgage borrowers, and borrowers who are underwater on their current mortgages. An additional random oversample of 400 persons who were 60 or more days delinquent on their home mortgage was also surveyed.
The survey's key findings were:
1. Most Americans are pessimistic about the economy, but more optimistic about their personal finances.
2. Americans are stressed about their debt and most think their savings are insufficient.
3. 80 percent of respondents believe homeownership is important to the economy but a majority view it as a growing challenge.
4. Nearly two-thirds of respondents think owning is better than renting.
5. 80 percent of Americans are confident they would get the necessary information if they were buying a home today.
6. A majority of mortgage borrowers are satisfied with the features of their current mortgage.
7. Being underwater has a significant impact on borrower attitudes and behaviors
8. Most borrowers feel that it is not acceptable to stop making mortgage payments, however, this attitude can be swayed by social forces.
A majority, 61 percent, of respondents feel that the economic is on the wrong track yet the overwhelming majority was upbeat about their own situation. 38 percent of respondents felt that their situation would remain the same while 44 percent expected it to get better. Renters were more optimistic about their personal finances (56 percent) than were homeowners or mortgage holders while those in both categories who also expected housing prices to rise were even more optimistic. Surprisingly, delinquent borrowers are more upbeat about their future finances than the general population; 63 percent felt their financial situation would improve in the next year.
One out of three participants reported that they were stressed about their ability to pay their debt and that they did not have sufficient levels of savings. This finding was particularly true of borrowers who were delinquent on their existing mortgages. 85 percent reported that they were particularly stressed and 86 percent said they did not have sufficient savings.
Two out of three Americans think that it is a good time to buy a home - a number that matches responses in a similar survey in 2003 - and 31 percent feel that it is a very good time to buy. 73 percent feel that prices will not decline further, a response about equally divided with 37 percent feeling that prices will go up in the next year and 36 percent expecting them to remain the same.
70 percent of the survey's respondents said that buying a home continues to be one of the safest investments. To put this in context, 74 percent ranked a bank account as a safe investment while only 17 percent had a similar view of investing in the stock market. This is down from 83 percent who viewed homeownership as a safer investment than a bank account in 2003.
65 percent would prefer owning a home to renting with 43 percent saying that safety and 37 percent calling school quality the drivers behind that preference. Both reasons ranked higher than any economic considerations.
Renters are happy with their situation, with 79 percent saying that renting has been positive for them and their families. Still, 75 percent feel that owning makes more sense than renting because it protects them from rent increases and is a good investment over the long term. The reasons that most renters, however, have not purchased is the belief that their credit history disqualifies them (54 percent) or that they might not be able to afford the purchase and upkeep of the home (47 percent). Nearly 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 it was in their parent's generation and 68 percent say it will be even harder for the next generation. Poor credit was cited by 22 percent as a stumbling block to getting a mortgage; lack of income was named by 19 percent while job security and lack of down payment were reasons given by 15 percent each.
Current mortgage borrowers tend to be satisfied with their mortgages, but that satisfaction is strongest among holders of fixed rate mortgages. While 90 percent of all participants expressed satisfaction the numbers break down to 93 percent of those with fixed rates mortgages but only 76 percent of hybrid adjustable rate mortgage holders and 68 percent of adjustable rate mortgage borrowers.
Americans hold some divergent views on borrower responsibility. Three quarters of those holding a mortgage say that, in the event of financial difficulties, they would try to keep paying their mortgage before they would pay other bills like credit cards and utilities. However, 42 percent of delinquent borrowers would put the mortgage payment behind other bills. 88 percent of all borrowers (and 70 percent of delinquent ones) do not believe it is acceptable for people to stop making mortgage payments solely because their mortgage is underwater while 8 percent felt it was acceptable. When the question was changed to include financial distress on the part of the borrower, 15 percent ten felt it was acceptable to stop making payments
Americans are split on whether banks should foreclose on delinquent borrowers; 48 percent said yes, 43 percent said no. 53 percent, however, feel that homeowners are responsible if they buy a home they can't afford.
Borrower attitudes toward mortgage payments seem to have a social component. When asked about the motivation for paying their mortgage 35 percent cited a negative impact on their credit score and 33 percent said moral qualms. There is also what Fannie Mae calls a "contagion effect) within communities. Both delinquent and non-delinquent borrowers were more than twice as likely to have seriously considered stopping payment on their mortgages if they knew someone who had already defaulted.