Fannie Mae's most recent nationwide housing survey finds that Americans are less certain that the housing market has bottomed, and continue to be wary of buying a home. The Third Quarter 2010 Fannie Mae National Housing Survey polled homeowners and renters between July 2010 and September 2010. Findings were compared to similar surveys conducted in June 2010, January 2010, and December 2003.
Fewer Americans think it is a good time to buy a home (68 percent, down two percentage points since June) and more Americans think it is a bad time to buy (29 percent, up three percentage points). Similar to the last survey, an overwhelming majority of Americans believe it is a bad time to sell a home (85 percent, up two percentage points since June).
"Consumer attitudes toward buying a home are more negative since last quarter," said Doug Duncan, vice president and chief economist, Fannie Mae. "Our survey shows that Americans' declining optimism about housing and their personal finances is reinforcing increasingly realistic attitudes toward owning and renting."
One-quarter of respondents think that home prices will rise during the next 12 months (six percentage points lower than in June), while 22 percent expect home prices to decline (four percentage points higher). Americans continue to believe that rental prices will rise more than home prices and continue to believe that rental prices will go up rather than go down by a ratio of almost 4 to 1 (Americans expect rental prices to rise by 2.8 percent over the next year, compared to 3.6 percent in June).
The perception that buying a home is a safe investment continues to decline among Americans. Although 66 percent of Americans think buying a house is a safe investment, this is down one percentage point from June 2010, down 4 percentage points from January 2010, and down 17 percentage points from 2003.
For the first time, delinquent borrowers are more likely to say they would rent rather than buy their next home—50 percent would rent (up 10 percentage points since January) and 45 percent would buy (down 11 percentage points since January). More than half of delinquent borrowers are very stressed about their debt, and, unlike most Americans, are falling into more debt—29 percent of delinquent borrowers have significantly increased their mortgage debt during the last year, almost three times the percentage of Mortgage borrowers who did so.
The survey showed that consumers are less confident about buying a home (despite fewer Americans believing that home mortgage interest rates will go up). Consumers also are less confident about home prices going up, a home purchase being a safe investment, and their personal finances.
The number of Americans who think it is a good time to buy a home dropped to 68 percent (down two percentage points since June). An overwhelming majority of Americans (85 percent) think it is a bad time to sell a house.
Americans are cautiously optimistic about their personal finances, with an equal percentage (41 percent) expecting their financial situation to improve as those expecting their finances to remain the same.
Fewer Americans expect home prices to rise during the next year. Delinquent borrowers and outright Owners are more likely to expect home prices to decline, in contrast to Underwater borrowers and Renters who think prices will go up modestly (0.4 percent and 1 percent, respectively).
Fewer Americans expect home mortgage interest rates to go up. While a plurality of Americans still expect rates to go up during the next year, Americans are more likely to expect the rates to remain flat, especially among mortgage borrowers and renters.
The perception that buying a home is a safe investment continues to decline among Americans, ranking second to putting money into a savings or money market account, and ranking just 1 percentage point ahead of putting money into an IRA or 401(k) plan.
Delinquent borrowers are increasingly cautious about owning, are very stressed about their debt, are making a great deal of financial sacrifice to own their home, and, unlike most Americans, have growing debt.
For the first time since January 2010, delinquent borrowers are more likely to transition to renting from owning. Those who would buy have declined 11 percentage points and those who would rent have increased 10 percentage points from January's levels.
Americans continue to be four times as likely to believe that home rental prices will go up rather than go down. Eighty-eight percent of delinquent borrowers say they are making a financial sacrifice to own their home, with 69 percent saying they are making a great deal of financial sacrifice.
More than half of dDelinquent borrowers are very stressed about their debt, with 7 in 10 believing that their household income is insufficient for their expenses. Overall, most Americans perceive their incomes to be sufficient for covering their expenses.
While more Americans report significantly lower mortgage and non-mortgage debt than those who report significantly higher debt versus a year ago, the opposite is true for Delinquent borrowers. Twenty-three percent of Mortgage borrowers have reduced their mortgage debt significantly in the last year, while 29 percent of Delinquent borrowers have increased their mortgage debt significantly.
The survey found that the incidence of knowing a defaulter is spreading among Americans, especially among those who have a mortgage. Forty-two percent of Americans, 63 percent of delinquent borrowers, and 58 percent of underwater borrowers (up three, seven, and 10 percentage points since June, respectively) know someone who has defaulted on a mortgage.
Those who know defaulters are more likely to have considered defaulting themselves. However, delinquent borrowers are nearly three times as likely to have considered stopping their mortgage payments completely if they know someone who has defaulted on their mortgage, and are more likely to know a strategic defaulter (i.e., someone who stops making mortgage payments despite having the financial capacity to pay them) than they were in June.
Fifty-five percent of underwater borrowers, 51 percent of all mortgage borrowers, and 43 percent of delinquent borrowers (up 11, 6, and 6 percentage points since January, respectively) think their lender would pursue other assets in addition to their home if they defaulted on their mortgage.
The survey continued to show a mix of optimism and concern among African-Americans and Hispanics regarding their personal financial situation and their ability to obtain a mortgage.
Sixty-five percent of African-Americans and 61 percent of Hispanics expect their personal financial situation to get better during the next year, compared to 41 percent of the general population.
African-Americans (75 percent) and Hispanics (74 percent) continue to cite building up wealth as a major reason to buy a home, compared to 59 percent of the general population. Fifty-one percent of African-Americans and 32 percent of Hispanics believe the economy is on the right track, compared to 28 percent of the general population.
Sixty-eight percent of African Americans and 73 percent of Hispanics believe that it would be difficult to get a home mortgage today. In comparison, 57 percent of the general population thinks getting a home mortgage today would be difficult.
For more information, visit www.fanniemae.com.
- Contact Center Manager (SAFE) 2 - Wells Fargo - Des Moines, IA
- Vice President, Lending - First Atlantic Federal Credit Union - Eatontown, NJ
- Underwriter III - Waterstone Mortgage - Pewaukee, WI
- Senior Mortgage Underwriter - WSECU - Olympia, WA
- Mortgage Underwriter Temporary - WSECU - Olympia, WA
- Mortgage Loan Coordinator - WSECU - Olympia, WA