Renting More Appealing, Says Fannie Mae Survey

Posted by Teresa on September 25, 2010 under Housing Trends | icon: commentBe the First to Comment

Tenant ScreeningA new survey by Fannie Mae reveals that the goal of home ownership is losing its appeal for Americans. Falling home prices, foreclosure and financial ruin is enough to make the strongest homeownership desire  fade, as evidenced by the falling number of people who say they consider housing a safe investment.

The percentage of Americans who though of housing as a safe investment was 83% in 2003. But by July of this year, it has fallen to 67%. That’s three points lower than January 2010. And, while more Americans (70% in July vs. 64% in January) believe home prices are nearing the bottom and it’s a good time to buy, the number of households saying they’re more likely to rent than buy rose from 30% in January to 33% in July.

Why Americans are Renting
If home prices are falling and mortgage rates are near 50-year lows, why wouldn’t more people be lining up to buy homes, rather than rent them? First, tighter lending standards. People simply can’t qualify for mortgages like they could in the free-flowing days of the early 2000s. Second, the still-stagnant labor market is keeping people from taking on more debt; those with jobs are paying off debt and tightening up on spending. Third, even if they did qualify for a mortgage, people think they cannot. In fact, more than 50% of renters believe they cannot obtain a mortgage to purchase a home.

Younger people are taking a wait-and-see approach, according to a Wall Street Journal article on the rental market. Where once they might have purchased a condo, they are renting for the long-term foreseeable future. They’ve seen friends become “stuck” owning homes they cannot sell, unable to move and take advantage of job opportunities. And, they see homeownership as an “economic trap.”

Economic analysts say these changing attitudes could lay a “more stable foundation for the housing market,” as Americans see homes as a durable good, like a car, and not an investment. And it’s good news for landlords, who could be enjoying lower vacancy rates in the future!

Report Shows Confusing Housing Market

Posted by Teresa on December 3, 2009 under Housing Trends | icon: commentBe the First to Comment

home and money on tenant screening blogZillow, the popular home-price website, also conducts surveys of homeowners, and occasionally publishes the results. Last month, their report showed that there is much confusion over pricing and home values.

In the northeast, home values are rising more than their owners realize. Only 20% of homeowners believed their homes gained value over the past 12 months—but 31% of homes in the region actually did.

To contrast, homeowners in the west are more optimistic—but unrealistic. 28% of homeowners believe their homes gained value, but only 17% actually did!

Nationally, the numbers were 25% of homeowners believing they gained value in their homes and 22% that actually did. 49% believed their homes lost value over the past 12 months—and in reality, a whopping 72% did.

This confusing situation could be why real estate investors and buyers (other than first timers) are holding off on purchasing property—until prices stabilize.The Zillow report also revealed that fewer Americans are underwater in their homes (owing more than it is worth). But, as job recovery remains slow, the 14% of all American mortgages delinquent or already in foreclosure will increase—and  put more vacant homes for sale or for rent in a market that is already saturated with more houses and apartments than demand can support.

It looks like the housing recovery real estate investors and landlords have been awaiting is still eluding them. The US Census Dept. reported that one in seven housing units was vacant in the third quarter—the highest number since the government began reporting the data in 1965. Until employment grows again, the outlook for a healthy housing market is less than stellar.