Fannie Mae Analysis Says Most Americans Want to Buy, But Will Rent for Now

• December 13, 2010
• 6 Comments

by Bryce Baschuk

Courtesy of Fannie Mae

Though most Americans still aspire to own a home, many are more willing to rent for the time being, according to the results of Fannie Mae’s 2010 Own-Rent Analysis released late last week.

The analysis reported that, in the third quarter of 2010, 33 percent of Americans said they were more likely to rent their next home than buy, a 3 percent increase over January 2010; 59 percent of current renters surveyed said that they would likely continue renting after their current lease ends. Fannie Mae’s researchers believe that demographic factors such as fewer married couples, less families with children and financial concerns are reasons why people are finding renting more attractive.

“Despite Americans’ strong desire to own their homes, our study reveals that life events are greatly influencing families’ decision to rent,” Doug Duncan, Fannie Mae vice president and chief economist, said. “This trend, coupled with the housing crisis, has caused consumers to approach homeownership with greater caution and thoughtfulness.”

Among the reasons as to why renters said they would continue renting rather than buying a home included:

• Not having good enough credit for a mortgage (52 percent of renters)
• Not being able to afford the purchase or upkeep of a home (46 percent of renters)
• Thinking it’s not a good time economically to buy (43 percent of renters)

The analysis surveyed a group of respondents from DC about their thoughts on homeownership in the current housing market.

“There’s definitely I think a stigma attached [to renting] but I think it was more-so before [the crisis],” a young male from DC in his 20s said. “But in hindsight, you were actually smart [if you continued to rent] because you decided it wasn’t within your ability to pay for a house…people who went outside their means and bought a house are the ones who are suffering now.”

The analysis revealed that young Americans in particular were affected by the housing crisis. Homeownership for those in their mid to late twenties fell by 11 percent since 2009 compared with a decline of 5 percent among those aged 35 to 44.

For the survey, 2.041 telephone interviews were conducted in August/September 2010 plus 1,566 additional respondents from geographic areas of interest. To inform the survey design, focus groups were held in Washington, DC and Phoenix, AZ during July and August 2010.

This article originally published at http://dc.urbanturf.com/articles/blog/fannie_mae_analysis_says_most_americans_want_to_buy_but_will_rent_for_now/2758

6 Comments

1. Mike said at 2:34 pm on Monday December 13, 2010:

   I fit into the third category “not sure it’s economically the right time to buy”.  I’ve been renting for 3 years now, and although I know Washington prices seem to have stabilized, there is no hurry to buy.  Sellers are also slow to put things on the market right now (available inventory is way down).  Economic uncertainty outside of just the housing market is a consideration, and the effect on jobs, inflation, interest rates, etc. I think all of that keeps many qualified buyers on the side lines.

1. Harrill said at 2:39 pm on Monday December 13, 2010:

   Nothing like having your own home and knowing its your little piece of the world.  Obviously you have to be financially responsible but renting is just not the same as owning.  You always feel you are in someones home and not yours.  I was brought up with the idea that you must own a home and that renting was just so common.

1. Mike said at 2:43 pm on Monday December 13, 2010:

   I’ve owned 2 homes before going back to renting for awhile and glad I did it this way.  I’d love to own again and agree that there is an intrinsic value of owning your own place…but rational decision making must enter the picture before making the plunge. I remember when I scoffed at renters when they could buy, but the past few years has taught me that it is the right thing sometimes.  I’d hate to be trapped in a house right now that lost 30% or more of it’s value if I needed to move.

1. PB said at 3:51 pm on Monday December 13, 2010:

   Renting now, but about to put in an offer on a home in Arlington.  Interest rates are driving my decision, I think they will continue to rise.  I think it’s a safe investment, even if it doesn’t appreciate a ton, I don’t expect it to lose value in the next 5 years.

1. Andi said at 4:21 pm on Tuesday December 14, 2010:

   It is definitely the right time to buy. Prices are not likely to go much lower (although them may dip slightly in 2011 due to increased inventory from foreclosures). But key here is not price, but cost. Interest rates are already on their way up. Experts expect interest rates to hit 5.5% in 2011 and 6.5% in 2012. A $250K home at 4.5% will cost you $300 less per month than if you wait and buy a $250K home at a 6.5% interest rate. For the same monthly payment, you will not be able to afford nearly as much house once the interest rates start going up. If you job is stable and your credit is good, buy now!

1. Mike said at 6:31 pm on Tuesday December 14, 2010:

   You are assuming prices will go up or stay the same. If interest rates go up, there tends to be an inverse relationship with price (i.e., prices tend to drop). Interest also can be deducted where price losses cannot.  If the government decides to pull back on interest rate deductions…wow, prices will then plummet.

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