The bursting of the housing bubble—and the Great Recession it ushered in—has sparked increased public debate about the value of homeownership and the one-size-fits-all housing policy that has prevailed in the United States for decades. Until recently, it’s been hard to gauge individual attitudes regarding housing—evidence consisted mainly of anecdotes and inferences from insufficient statistics. In 2010, however, Fannie Mae introduced a revamped National Housing Survey, featuring increased attention to renting and to renters’ attitudes and intents. The survey, conducted last November, indicates that some rethinking is under way. Among its various results, the survey finds shifting opinions about whether a house is a good financial investment: Though owning a house remains an important goal to many, the most important considerations cited are not financial reasons.
The survey also explores attitudes about renting and finds that for some owners, there is an increased likelihood they will rent their next house. Perhaps most important, four out of five current renters say renting has been a positive experience. While that’s not as high as the share of owners for whom homeownership has been positive (96 percent), it nonetheless indicates a very high level of satisfaction.
The survey indicates a shift in the country’s thinking about what constitutes a smart housing choice—and is a trend that the apartment industry is well poised to take advantage of.
From 1992 until 2003, Fannie Mae conducted an annual housing survey primarily to assess Americans’ attitudes toward homeownership. The survey had some important information on renters, especially about whether they rented by choice or circumstance. From 1994 to 1999, the “renter by choice” segment ranged from 23 percent to 28 percent. In 2000, however, that figure rose to 32 percent; in 2001, it climbed to 41 percent. (Note: Fannie Mae stopped asking that question after 2001.)
Fast-forward to the 2010 survey, and there is a clear indication that the housing bubble’s collapse has changed perceptions about renting. Two-thirds of the population considers buying a house a safe investment—that’s a 16 percentage point decline from 2003. By comparison, respondents considered other investments less safe, too, but those drops were not nearly as great—a 3 percentage point drop for savings accounts, 7 percentage points for 401(k)/IRAs, and 10 percentage points for stocks.
Renters are less convinced than owners of the investment value of homeownership: Only 56 percent think buying a house is a safe investment. That’s a drop from recent figures—as recently as January 2010, 61 percent of renters said buying a house was a safe investment.
Asked whether this is a “good time to buy a house,” 68 percent of the general population said yes—and 60 percent of renters agree—compared with 29 percent (36 percent of renters) who think this is a bad time to buy a house. Interestingly, 86 percent of the overall population (and 80 percent of renters) think this is a bad time to sell a house. In other words, there is a subset of the population that thinks it’s both a bad time to buy and a bad time to sell a house.
Only a quarter of the population thinks house prices will rise over the next year. Renters are actually the most optimistic demographic group in this regard—30 percent think prices will rise over the next year. By contrast, 37 percent of the general population think rents will go up, as do 46 percent of renters.
According to the survey, there is an increased likelihood that people who move will choose to rent rather than buy. One-third (33 percent) of the general population would opt to rent (up a bit from 30 percent in January 2010). A strong majority of renters would continue to rent (59 percent, up from 54 percent in January 2010). And of those who would rent again, one-third (34 percent) said they do not plan to become an owner at any point in the future.
Of greater consequence may be the changing attitudes of borrowers who are at least two months behind on their mortgage payments. Just over a year ago, only 40 percent of delinquent borrowers said they would rent their next home. That number is now 50 percent, suggesting that renting will be a more frequent choice among movers in the near future.
Indeed, the Fannie Mae survey results are a sign that there is some rethinking happening when it comes to attitudes about homeownership versus renting as a housing choice. If so, this may be the best window of opportunity in quite a while to promote apartment living.
Mark Obrinsky is vice president of research and chief economist for the National Multi Housing Council in Washington, D.C.