8 in 10 US Adults See Home as Best Investment

April 13, 2011

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Analytics, Automated & MarTech | Data-driven | Financial Services | Real Estate | Uncategorized

pew-research-home-as-investment-1991-2011-apr11.gifDespite a five-year period of depressed home prices, eight in 10 (81%) of US adults still say home ownership is the best long-term investment a person can make, according to new data from the Pew Research Center. Forty-four percent somewhat agree with that statement and 37% strongly agree.

Opinion Similar to Last Home Price Downturn

The 2011 response rate is little changed from 1991, when the US was in the midst of its last serious downturn in home prices. Eighty-four percent of adults said home ownership was the best long-term investment 20 years ago, although the percentage strongly agreeing (49%) was about 32% higher.

Almost Half of Homeowners Say Home Worth Less

pew-home-assess-apr-2011.JPGHomeowners are not blind to what has happened to home prices, nor are they expecting a speedy recovery. Among the 1,222 homeowners in the nationwide Pew Research Center telephone survey, about half (47%) say their home is worth less now than before the recession began, and 31% say its value has stayed the same. Just 17% say their home is worth more.

Interestingly, 82% of homeowners who say their home is worth less now than before the recession began either strongly (37%) or somewhat (45%) agree that homeownership is the best long-term investment a person can make. That makes this subgroup which has lost money slightly more optimistic than the overall respondent base.

More expectedly, among homeowners whose home increased in value during the recession, this confidence is even more pronounced. Half (49%) strongly and 41% somewhat agree that owning a home is the best long-term investment.

Most with Lower Home Value Expect Recovery of 3 Yrs or More

pew-home-recovery-apr-2011.JPGOf those who say their home has lost value, 86% say they expect it to take at least three years for values to recover to pre-recession levels; 42% say it will take at least six years; and 10% say it will take more than 10 years.

Homeowners More Positive than Renters

Overall, homeowners are more positive than renters about the financial wisdom of owning a home; 41% of homeowners strongly agree that this is the best long-term investment a person can make, compared with just 31% of renters. (The survey sample included 57% of respondents who own a home and 30% who are renters; the remainder has other arrangements, such as living with family members.)

Home Ownership, Comfy Retirement Top Goals

pew-home-goals-apr-2011.JPGMore evidence of the durability of Americans’ belief in homeownership comes from a question in which respondents are asked to assess the importance of four long-term financial goals. Homeownership and “being able to live comfortably in retirement” are rated the highest; each is seen as being extremely or very important by 80% of respondents.

Nearly as many (73%) say the same about being able to pay for their children’s college education, and about half (53%) say the same about being able to leave an inheritance for their children. (These percentages do not include those who volunteered a “does not apply” response).

1 in 4 Homeowners Would Not Buy Current Home

The Pew Research survey did find that nearly a quarter (23%) of all homeowners say that if they had it to do all over again, they would not buy their current home. But 60% of these respondents cite complaints about the home itself (43%) or the location (17%). Just 31% cite financial factors.

Of those citing financial problems with their home, about half (16%) say their home has either lost value or failed to rise in value; others point to changes in the economy or their own financial circumstances.

Mortgage Difficulty Common, But Decreasing

A recent Harris Poll finds that fully 22% of people with mortgages are having difficulty meeting their mortgage payments, including 7% who are having “a great deal of difficulty”. Furthermore, 21% of those with mortgages are “underwater” in that they think their homes are worth less than the amounts that they owe.

However these numbers are somewhat lower than they were in March 2010. Those having difficulty paying off their mortgages have declined 24%, from 29% to 22%. Those having a great deal of difficulty are down 36%, from 11% to 7%. Furthermore, at this time last year, 24% of those with mortgages thought they were underwater, 12.5% higher than the number now.

About the Data:Figures come from a Pew Research Center survey of 2,142 adults conducted from March 15 to March 29, 2011.

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