Americans Buy Homes For the Intangible Benefits, Not Investment Performance
Fewer Americans than before believe buying a home is a safe investment, according to a national poll by Fannie Mae. On the other hand, Americans still think buying a home is one of the best investments you can make, according to a survey on homeownership by Allstate and the National Journal.
The percentage of Americans who believe that buying a home is a safe investment declined to 64% over the course of the year, from 70% in January 2010. This is down sharply from a similar survey conducted in December 2003, when 83% of the general population thought buying a home was a safe investment, according to a Fannie Mae survey dated February 28, 2011.
Younger Americans, Hispanics, and African-Americans are generally more positive about owning a home than the general population, the Fannie Mae survey found. Fifty-nine percent of Generation Y (ages 18-34) believes buying a home has a lot of potential as an investment, even though this age group suffered the steepest decline in homeownership during the housing crisis — from nearly 44% when home prices peaked to under 40% in 2009.
More than one-third of Hispanics (34%) and African Americans (35%) say they will buy a home in the next three years, compared to only one in four (23%) of all other Americans.
A More Nuanced Survey
The Allstate / National Journal poll, released March 19, 2011, paints a more detailed picture of Americans' perceptions of home ownership today. In general, even homeowners who have seen no increase in their home's equity perceive homeownership in a positive light due to the intangibles of home ownership. 60 percent of homeowners surveyed said homeownership give them a chance to settle down, compared to 36% who said they see it as a way to build equity they can use to buy a bigger home.
Three-quarters of the respondents believe home ownership is a stable investment they can pass on to their family. Seventy-six percent of home owners said they would recommend home ownership to a family member, and 90% of homeowners would buy a home again. There is an emotional attachment to home ownership, the survey found.
However, the survey also found that Americans believe tax policy made home ownership too easy, and that tax policy encouraged too many first-time home buyers to buy homes. In other words, the Allstate / National Journal poll found that respondents believe home ownership is right for them, whether they own a home or not, but is not right for everyone.
Tellingly, respondents split on whether the federal government should maintain the same amount of funding on homeowner programs, or scale it back.
Fifty percent said in the the Allstate / National Journal poll that the federal government should maintain the mortgage interest deduction, but 43% favored eliminating or limiting it. Seventy one percent of those owners acknowledged that they take the mortgage-interest deduction.