The Chicago Tribune
By: Mary Ellen Podmolik
September 16, 2012
With the presidential election edging closer, both parties have focused on the topic of whether voters are better off than they were four years ago.
But what about homeowners? Are they?
Homes have lost a significant portion of their value since the housing bubble burst. Millions of homeowners are underwater on their mortgages, and foreclosures have popped up in even the best neighborhoods.
Yet consumers still embrace the American dream of homeownership. Even the majority of consumers who bought a home four years ago are satisfied with their homeownership choice, according to a new survey by ZipRealty.
The company surveyed its customers who bought a home in 2008 and found that almost 94 percent of them still owned the home, and 61 percent said that from a homeowner's standpoint, they were neutral to significantly better off than they were four years ago.
It's the first time Emeryville, Calif.-based ZipRealty has posed such a question to its customers, and it did so because of the election dialogue. The results surprised company CEO Lanny Baker, a Glencoe native.
"There just about isn't a place in the United States where home values aren't lower in 2012 than they were in 2008," he noted.
Maybe part of the reason for that optimistic response is that, according to the survey, 60 percent of buyers said they went into the transaction with the intention of living in the home for seven years or more. That might partially explain why homeowners remain upbeat, despite the fact that 73 percent said they think their property values have decreased since 2008.
(In the Chicago area, home values are down by about a third since the market peaked in September 2006, according to the S&P/Case-Shiller home price index.)
Baker thinks some homeowners may be taking a revised, longer view of just how long they plan to stay in a particular property because they're unable to sell, given market conditions. Still, he believes the results, while only from a sample size of 915 people, cast doubt on the long-term prospects for a "renter nation."
"It's a stunning testament to the emotion of a home," Baker said. "This may be one of those seemingly surprising but common-sense reminders. Even if you're (including) the people with negative equity and they're still getting some satisfaction out of homeownership, that tells you how durable the concept is."
A recent study by Fannie Mae seems to hint at much the same conclusion. In looking at what factors influence a consumer's housing decisions, researchers studied the subjective attitudes as well as the demographic factors that determined whether someone was a renter or a homeowner, and what they wanted to be if they moved.
The research concluded that demographics like marital status, income, employment situation and age determine where someone lives right now and their future moves if they own their homes outright, with no mortgage.
But the study, pulled from the responses of more than 12,000 people surveyed by Fannie Mae last year, also found that subjective attitudes about housing can even subconsciously drive the own/rent decision-making process for renters and those homeowners with a mortgage. Those attitudes cover areas like whether it's a good time to buy, whether getting a mortgage would be difficult, and whether owning a home would make more sense than renting.
Perhaps surprisingly, consumers polled showed little resistance to the idea of homeownership even if they'd been exposed to mortgage default or home value depreciation.
Some 85 percent of consumers said that owning a home made more sense financially over the long run than renting one, and 64 percent of people said if they were going to move, they'd buy their next home.
"These results suggest that Americans' aspirations to own a home are strong even when facing the dramatic challenges in the housing market over the past few years," the researchers wrote. "For renters and mortgage-owners, aspirations for and belief in homeownership play a major role in decision-making, possibly forming a 'homeownership optimism' in determining whether they expect to own or rent in the future," the researchers wrote.