By Peter Ricci
It’s one of the titanic arguments in the world of real estate – rent or buy?
Indeed, few arguments in our beloved business inspire such fervent support, and few have been fueled more successfully by the housing downturn. As the rental vacancy rate has fallen to its lowest level in decades, housing affordability is at its highest level in the history of NAR’s affordability index, a divide that leaves one wondering what choices consumers will make to satisfy their housing needs – a question that Fannie May has attempted to answer in a new report.
Variables of Homebuying 101
For its study, Fannie analyzed two variables: current homeownership status (how do you live?), and prospective homeownership intent (if you were moving, how would you live?). Here’s what they found:
- Demographics – the respondent’s income, age, marital status, employment status, urbanicity and race – were far and away the most influential factors on whether individuals rented or owned, with 79 percent chalking their current status up to those reasons.
- Interestingly, the group that believed their housing decision made the most sense was renters, with 28 percent making that statement, compared to 17 percent of mortgage owners and 15 percent of outright owners.
- Twenty-five percent of mortgage owners said they purchased a house because of the ease of attaining financing.
The Benefits of Homeownership
Perhaps the most promising finding of Fannie’s survey, though, was the resiliency of most consumers, and the fact that despite economic adversity, many still see homeownership’s benefits and aspire to own a home. Despite exposure to mortgage default, perceived home value appreciation/depreciation and negative equity, none was a significant factor in predicting an individual’s intentions to own a home for their next move.
After all, in its 2011 National Housing Survey, Fannie found that 85 percent of respondents still felt that owning made more long-term financial sense than renting, which goes to show what we hear every day from agents: even after the toughest economic climate since the Great Depression, consumers are still interested in the benefits of homeownership.