 As an investment priority, Americans rate their homes far ahead of their 401ks, retirement accounts, and stocks. Despite the ailing economy, many homeowners say they have actually seen their net worth rise because of an increase in their home’s value.
In fact, 85% of homeowners surveyed in Fannie Mae’s 11th annual National Housing Survey of American Attitudes say their home’s value has increased at least a little since they have owned it. Sixty-one percent say the value of their home has increased a lot.
"Encouraged by the lowest interest rates in at least a generation, the highest percentage of Americans since 1994 say now is a very good time to buy a home, and a quarter of Americans plan to do so in the next three years," said Fannie Mae Chairman and CEO Franklin D. Raines.
But the results also suggest that even more people could become homeowners if armed with the correct information.
Many people, particularly minorities, are not aware of how easy and affordable it has become to buy a home. Too many obstacles – such as knowledge about the process and saving for a down payment – continue to slow minorities on the path to homeownership.
Baby boomers, minorities, and immigrants are seen as three important forces shaping the future of America’s housing. The survey confirms that many homebuyers in the next three years will come from these groups.
Nearly a third (31%) of baby-boomers say they are very or fairly likely to buy a home in the next three years. Forty-two percent of African-Americans, 37% of Hispanics, and 34% of Hispanic immigrants also plan to become homeowners during that span.
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Most Americans (70% of survey respondents) see buying a home as a safe and smart investment. This compares with the 38% of survey respondents who say an IRA or 401k plan is a safe investment with lots of potential. Just 10% feel that way about stocks.
Two in five Americans say they follow the housing market very or fairly closely. In this group, 76% say buying a home is a safe investment with lots of potential, and 78% say it is a somewhat or very good time to buy a home.
How important is the investment aspect of homeownership? The potential financial gain is more often given as a reason to buy than is either the size or location of a particular house. Financial considerations are second only to safety as the most important aspect of buying a home. Fifty-five percent rate affordability as the most important reason to buy while 41% of survey respondents say appreciation in value is at or near the top of their list.
Why are Americans so optimistic about housing? Three words: low interest rates. Forty-two percent say low interest rates are the reason now is a good time to buy. The long-term investment potential of owning a home was the most often cited reason (75% of survey respondents) to buy a home. This view is shared by a majority of Americans of all ages, incomes, and in every region of the country.
Most Americans (86%) believe housing prices will go up over the next year. Only 8% believe prices will drop. Forty-four percent believe changes in property values, at least in the short run, are a good reason to buy now.
Those who pay the closest attention to housing prices are equally optimistic. Among those, 54% say prices will go up, and 32% say prices will remain about the same.
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