The U.S. recession and ensuing housing market struggle has had a devastating impact on home ownership statistics and confidence in home buying across the country. A new Gallup poll indicates that home ownership is down 6% from last year to 62%, and the percentage of those owners who feel their homes are worth more now than when they bought them has rocketed down to 53% from 92% in 2006. While confidence is down, the poll showed that it has improved from last year and that 70% of people feel that now is a good time to buy a home, although that does not necessarily translate into more people entering the market. For more on this continue reading the following article from Property Wire.
Home ownership in the United States has declined to 62% and only half of them believe that their house is worth more than when they bought it, a new poll shows.
The current level of home ownership marks a decline from 68% in 2011, according to the survey from Gallup.
For most of the prior decade, roughly seven in 10 Americans reported owning their own home. While the recession and financial crisis took place in 2008-2009, homeownership rates didn’t begin to reflect the bursting of the housing bubble until 2010, when 65% of Americans reported owning their own home, the lowest level recorded before this year.
Some 53% of Americans believe their house is worth more today than when they bought it, down significantly from 80% in 2008 and 92% in 2006. It confirms that many Americans are underwater in terms of the value of the home they currently own.
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Houses that were purchased many years ago, well before the collapse of the real estate market, are more likely to be worth more today than when they were bought. Accordingly, older Americans are less likely to say their home’s value has not appreciated since they bought it and 31% of Americans aged 50 and older say this. In contrast, 62% of Americans aged 30 to 49, many of whom likely bought homes closer to the collapse, say their home is not worth more.
Most, some 70%, believe that because of lower home prices and continued low mortgage interest rates mean that now is a good time to buy a house. This is about the same as in the past several years, but up from 53% in 2008.
Americans are much more positive about the direction of house prices this year than they were last year. They are significantly more likely to expect the average price of houses in their area to increase over the next 12 months than to decrease, 33% against 23%. Last year, Americans were about evenly split, 28% to 30%.
The survey also reveals that today’s housing price expectations differ sharply from those during the housing price boom. In 2005, 70% of Americans expected house prices in their area to increase, while 5% expected them to decrease. Expectations moderated as prices hit record levels in 2006/2007. Expectations became more negative during the recession and financial crisis. In 2010, price expectations were similar to those anticipated today.
‘Most Americans recognize that now is likely a good time to buy a house. Mortgage rates remain at historical lows and Federal Reserve policy seems determined to keep them low for some time to come. While recent Case-Shiller measurements show home prices declining, about one in three Americans expect house prices to increase over the next 12 months and another 44% expect prices to remain unchanged. Relatively stable prices and low interest rates would seem to make buying a house extremely attractive in many local housing markets,’ said Gallup.
The pollster organisations reckons that part of the explanation for decade low home ownership has to do with today’s broken housing finance system that depends on Fannie Mae, Freddie Mac, and FHA/VA. ‘Potential home buyers can take advantage of today’s low mortgage interest rates only if they can meet significantly more stringent down payment and underwriting standards than was the case prior to the financial crisis,’ it pointed out.
‘While record home foreclosures and distress sales resulting in declining house values have also played a role in the declining rate of homeownership in recent years, so has the weakness of the overall economy. Buying a home is the most important purchase and largest financial commitment most people make during their lives. For most Americans, it is hard to feel secure enough to make such a commitment when the economy is growing slowly and they see nearly one in five workers underemployed, that is, unemployed or employed part time but willing to work full time,’ it added.
‘Declining home ownership rates suggest some Americans are beginning to doubt that home ownership remains part of the American dream, or at least, an attainable part of it. From an economic perspective, US economic growth needs to be much stronger than it has been in order to achieve the hiring necessary to get unemployment rates to the normal levels of the past. This doesn’t seem likely as long as housing activity remains relatively moribund and home ownership rates are declining,’ it concluded.
This article was republished with permission from Property Wire.