December 10, 2010 10:29 am
RISMEDIA, December 10, 2010--A new study released by Fannie Mae finds that most Americans--both those who currently own their homes and those who rent--strongly aspire to own a home and to maintain homeownership, despite challenges 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.
The Fannie Mae 2010 Own-Rent Analysis is based on extensive primary research with homeowners and renters, U.S. Census Bureau data, and micro- and macro- economic parameters, and explores the factors influencing consumers' decisions to buy or rent a home. The release highlights two of the four major themes of this analysis in reports titled, Persistence of the Homeownership Aspiration and Housing Choices Throughout the Lifecycle and the Impact of Changing Demographics. The reports are available on www.fanniemae.com. The remaining two themes from this analysis will be announced next week.
According to the study findings, 51% 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%) would be more likely to rent their next home than buy, up from 30 % in January 2010. Among renters, 59% said they would continue to rent in their next move, compared to 54% in January 2010.
The Fannie Mae National Housing Survey is an ongoing research initiative that surveys Americans' attitudes about housing on a monthly basis. The most recent installment of this survey, released in November, showed that aspirations toward homeownership remain strong well in excess of current homeownership rates but decisions to buy are tempered by current consumers' cautious attitudes toward home buying in the current financial environment and a more conservative housing finance environment.
"Despite Americans' strong desire to own their homes, our study reveals that life events are greatly influencing families' decision to rent. This trend, coupled with the housing crisis, has caused consumers to approach homeownership with greater caution and thoughtfulness," said Doug Duncan, Fannie Mae vice president and chief economist.
Fannie Mae's research analysis indicates that shifting U.S. demographic and lifestyle trends correlate to consumers' housing decisions, which may have long-term implications for the housing market. For example, married couples historically have been more likely to own than other households, but traditional married couples are a shrinking portion of the population. Additionally, having children has increased the propensity to own a home, historically, although many families with children (particularly single mothers) currently are renting because of financial constraints, and the percentage of households with children is declining overall.
"The data in the analysis aligns with what we're seeing in the market. More Americans are viewing rental housing as an attractive and sustainable housing option. As a result, we remain focused on helping America's working families--many of whom have incomes at or below the median in their communities--live in quality, sustainable, affordable rental housing," said Ken Bacon, executive vice president of Fannie Mae's Multifamily Mortgage Business.
Overview of Key Findings
Desire for Homeownership Remains Strong
- Fifty-one percent of those surveyed reported the housing crisis had little or no impact on their intentions to buy or rent, versus 27% who said they are more likely to buy and 19% who said they are more likely to rent.
- The substantial majority of homeowners (89%), as well as nearly half of renters (44 %) believe they would be better off owning their homes, given their current financial situations.
Americans' Housing Choices Impacted by Lifestyle and Stages of Life
- 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%) 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% since peak rates, compared with a decline of 5% among those 35 to 44 and less for those 45 and older.
Changing Demographic and Lifestyle Trends May Create Shifts in Housing Market Over Time
- Married couples, statistically most likely to own a home, represent a shrinking portion of the population--50% of households in 2009, compared with 56% 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% of single mothers rent, versus 32% 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% in 2009.
- Homeownership rates increase with age, and the U.S. population is experiencing an aging trend fueled by the baby boomers. Thirty-eight percent of households were headed by someone 55 or older in 2009, versus 35% in 1990.
- Possibly reflecting changing demographics and economic caution, recently, the size of new homes has begun to decrease, reversing a long-standing trend of more space per person. There has been a 6% decline in median square footage of new homes from the peak of the housing bubble in 2006 to the second quarter of 2010.