Desire to own is very strong 91% would drive a cheaper car in order to buy a home

Fannie Mae survey

1,857 interviewed

many say the process has gotten harder

June 16, 1996|By Daniel H. Barkin | Daniel H. Barkin,SUN STAFF

This is how important it is to Americans to own their own home, according to the latest Fannie Mae survey:

Ninety-one percent would drive a cheaper car if that made the difference between being able to own and renting, up from 81 percent in 1992.

Eighty-one percent would commute a longer distance to work, if cheaper prices farther out made ownership possible, up from 63 percent four years ago.

Sixty-seven percent would put off retirement for 10 years, up from 59 percent in 1992.

"Americans have an even stronger desire for homeownership today than we found in 1992," said James A. Johnson, chairman and chief executive officer of Fannie Mae, in releasing the 1996 survey results.

The survey, in which 1,857 people were interviewed nationwide in April, is the latest in an annual series conducted by Fannie Mae since 1992. Fannie Mae, the Federal National Mortgage Association, purchases mortgages made by lenders, freeing up funds for new loans. The company, created by Congress in 1938, has been a shareholder-owned company since 1968.

The survey portrays an America that still believes buying a home is a good investment (73 percent), even though values have increased at a slower rate in the 1990s than in the previous decades.

Around the same proportion (74 percent) would recommend that a 30-year-old friend use $10,000 in savings for a down payment on a house rather than invest it in stocks.

More than three in five Americans said that it's now a good time to buy a house, including 28 percent who say it is a "very good time to buy." That is higher than in the 1995 survey (18 percent), but down from the 50 percent in 1993 who said it was a "very good time."

Insecurity

Forty-three percent of those surveyed said homeownership is within reach today of people age 25 to 29, up from 24 percent in 1992. And 76 percent said homeownership is within reach for those 30 to 35 years old.

More than one in four (29 percent) low- and moderate-income renters said they were fairly or very likely to buy a home in the next three years.

Some of the survey's findings highlight obstacles to homeownership, such as perceptions of job insecurity.

"In fact, the surge in the percentage of respondents who cite as an obstacle to homeownership their level of confidence in the security of their job is remarkable: In 1995, only one in four adults (26 percent) cited this as a problem, yet this year nearly one in two (48 percent) do so," the report said.

However, the survey points up a paradox. Ninety percent of those surveyed this year say that they believe their family's financial situation would either "stay about the same" or "get much/somewhat better." The percentage of those who think their financial situation will worsen has actually declined since 1994 -- to 7 percent from 8 percent.

"Most likely," the Fannie Mae report said, "the explanation is that people hold both thoughts simultaneously -- confidence that they and their families are going to do better in the midst of a strong economy, while still retaining anxiety and fear about the future."

"Certainly, the public dialogue in the spring of 1996, from extensive newspaper and magazine coverage about downsizing in corporate America to the issues discussed in political campaigns, has accentuated fears about middle-class job prospects," the report added.

At the same time, the economy grew in the first quarter, creating jobs, and "giving Americans tangible evidence that their economic prospects were not as dismal as reports of layoffs would indicate."

Increasing the percentage of homeowners in the United States has been a major initiative of the Clinton administration, as well as of quasi-public agencies such as Fannie Mae. About two-thirds of American families own their own homes, but that percentage is higher in the suburbs than in the cities. Two years ago, Fannie Mae launched a nationwide program to finance $1 trillion in mortgages over a decade. Locally, Fannie Mae created the Baltimore Partnership Office in April 1994 to help boost homeownership in the city, which has been under 50 percent.

More difficult

The new Fannie Mae survey illustrates the challenges facing real estate and homebuilding industry groups, as well as government agencies, as they try to lower the barriers to homeownership.

The lack of enough money for a down payment and closing costs was cited as a major obstacle by 52 percent of the individuals surveyed, up from 44 percent in 1995.

The homebuying process was viewed as getting more difficult by many respondents. Of all adults, 36 percent said it had gotten more difficult over the past five years while 28 percent said it had gotten easier. Among low- to moderate-income renters, 43 percent said it had gotten more difficult, compared with 23 percent who said it had become easier.

The survey shows that among low- to moderate-income renters, 67 percent believe elimination of the mortgage-interest deduction would have a major or moderate negative effect on their ability to buy a home.

Pub Date: 6/16/96

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