What fills that dreamy thought bubble looming over the head of the average American? Does the white picket fence still make the cut?
The National Association of Realtors (NAR) is the latest organization to weigh in on whether Americans still consider homeownership to be part of the American dream. Its first Housing Opportunities and Market Experiences (HOME) survey shows that buying a home is still a priority for most Americans, despite feeling “lukewarm” about the U.S. economy following the housing market crash and recession.
Last week, Trulia released the results of its annual housing industry survey, revealing that “the American dream of homeownership is not only alive and well, but continues its resurgence,” and any reluctance arising from the most recent housing market crash “seems to have only temporarily diminished Americans’ obsession for real estate.”
Another survey conducted by multimedia company Fusion concluded that millennial Americans still consider owning a home to be part of the American dream, but don’t consider it a priority — potentially because they are grappling with “mounting debt, uncertain job prospects and stagnating wages,” among other factors.
Many millennials stand ready to ditch their rentals
NAR’s inaugural HOME survey, which is intended to be a quarterly household poll, seems to fall somewhere in the middle of those two recent conclusions.
The HOME survey indicated that although only half of polled households believe the economy is currently improving, nearly all young renters eventually want to buy a home. An overwhelming majority, or 94 percent, of current renters ages 34 and younger said they want to own a home in the future. Another 83 percent of polled renters said they have a desire to own, and 77 percent said they believe homeownership is part of their personal American dream.
But money woes remain top-of-mind
However, only 57 percent of those renters said they believe the economy is improving, and 44 percent said they think the economy is still in a recession, the HOME survey concluded.
In addition, about 65 percent of surveyed households said they think it would be “very difficult” or “somewhat difficult” to obtain a mortgage, and showed differences among their income brackets.
Renter households making between $30,000 and $40,000 were the most likely to be declined a mortgage (10 percent), while 51 percent of those who make more than $50,000 a year have not tried, but still feel confident they would succeed in getting a mortgage.
Overall, 5 percent of renters said they recently tried and failed to obtain financing for a home.
Standing in their way are the inability to afford a home purchase and needing the flexibility of renting rather than owning, the survey concluded. These renters may be talked off the fence by lifestyle considerations such as getting married, starting a family or retiring, or an improvement in their financial situation.
“A combination of factors, such as rising rents and home prices, limited supply, repaying student debt and getting married and having children later in life has more to do with the currently underperforming share of first-time buyers than the idea that buying a home is not as desirable as it used to be,” said NAR Chief Economist Lawrence Yun.
In fact, the pace of existing sales would likely be more robust if not for the economy’s subpar growth since the downturn and wage gains that have failed to keep pace with rents and home prices, Yun added.
“Young adults, who make up the majority of all renter households, are typically more optimistic about their future. As more of them settle down and begin plans to start a family, the allure of owning their own home as well as the long-term financial stability homeownership provides will drive their emergence into the housing market,” Yun said. “However, the extent to how fast this occurs will greatly depend on more entry-level housing supply coming onto the market and needed improvements in affordability conditions.”
Future surveys
The HOME survey asked 9,000 households, both renters and homeowners, about several topics related to homeownership, the economy and their personal financial outlook. Future surveys will track real estate trends, including current renters and homeowners’ views and aspirations regarding homeownership, whether or not it’s a good time to buy or sell a home and expectations and experiences in the mortgage market.
