The down market may have left depressed home values across much of the nation, but an overwhelming 72 percent of renters still say owning a home is a top priority. The National Association of Realtors'® (NAR) 2011 National Housing Pulse Survey revealed that homeownership, and access to it, are on the minds of renters.
"Despite the economic setbacks Americans have experienced in today's current climate, it is clear that a strong majority still believe in home ownership and aspire to own a home," said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I.
One of the main obstacles to homeownership remains readily available credit and struggles to procure a down payment. The proposed Qualified Residential Mortgage rule, which would require a 20 percent downpayment, has raised concerns from many industry leaders.
The NAR survey revealed that 51 percent of self-described "working class" homeowners who currently own their homes said this new rule would have been a road block to homeownership for them. This same statistic applied to younger non-college graduates, African Americans, and Hispanics.
According to NAR, "Pulse surveys for the past eight years have consistently reported that having enough money for a down payment and closing costs are top obstacles that make housing unaffordable for Americans. Eighty-two percent of respondents cited these as the top obstacle, followed by having confidence in one's job security."
Some pundits argue, however, that unchecked lending to underqualified candidates is what led to the housing collapse in the first place. According to the National Bureau of Economics, only 51 percent of Americans could come up with $2,000 cash in case of an emergency. This begs the question, "What part of this 51 percent should be qualified for mortgages to raise homeownership rates?"
Homeownership rates were below 50 percent in the first half of the 1900's, and only began to rise in the last few decades. Has the recent rise mirrored past gains during times of robust economy. The U.S. Census Bureau reports, "The homeownership rate declined slowly but steadily from 1900 to 1920. A robust economy in the 1920s raised the homeownership rate, but the Great Depression drove the rate to its lowest level of the century at 44 percent in 1940."
Of course, the interesting statistic would be how many people currently own their homes outright with no mortgage. Recent estimates are around 30 percent. The current foreclosure crisis has taught us that having any mortgage at all means the home is not your house; it's the bank's. That means only 30 percent of Americans are homeowners in the truest sense of the word, as harsh as this statistic might sound.
The housing market and economy are tightly linked, however, with one dependant on the other for recovery. The national unemployment rate lingers around 9 percent at this time, with an even larger number being underemployed. Industry leaders have reason to be pushing homeownership. Homeownership means increased jobs and consumer spending.
Plus, owning a home matters to people. It makes people feel stable and safe.
When asked why home ownership matters to them, respondents cited stability and safety as the top reason. Long-term economic reasons such as building equity followed closely behind.
Carla Hill RealtyTimes.com July 7, 2011