Friday, October 15, 2010

Is Buying a Home a Good Decision?

We finish the week with a new survey released just yesterday by the National Association of Realtors which shows that the number of Americans who believe buying a home is a smart financial move has dropped every year since 2007 and that overall support for homeownership has dropped a total of 6% from 83% to 77%.   The survey shows that during this same period, the number of Americans who strongly believe that home ownership is a good financial decision has fallen from 80% to just 68%.

Conversely, 16% of Americans believe that homeownership is not a good financial decision, which is up from 10% ten years ago.  According to the NAR survey, in the second quarter of 2010 66.9% of Americans owned their homes.

I have seen this negative attitude toward homeownership spread through the media this summer and I have heard it repeated by politicians, but this week it hit closer to home as I talked with my brother who is here visiting from Miami.  My brother owned a home a number of years ago when he was living in Kansas City.  When he moved to Chicago with his job, he rented an apartment in a 34 story high rise.  Now, I understand that he has a condo close to the beach in Miami.  I asked him whether he owned it or was just renting it.  "I rent," he answered firmly. When I suggested that with mortgage interest rates so low, he might consider purchasing, he brushed off the suggestion. "You'd have to be nuts to buy a condo in Miami.  Everybody in Miami is in a condo.  My neighbors have had theirs for sale for 2 years with no luck. If you buy a condo there, you will never be able to get rid of it--you will have it forever."

In my brother's case, that might make sense.  After all, he is a single man living in Miami for his work.  He knows that he does not plan to stay in Miami--he wants to retire someplace totally different.  As a photographer for CNN, he travels constantly.  When I asked how Miami was he answered that he did not really know because he is never there.  His rental condo provides little more than a place to sleep when he is between assignments and a permanent address for receiving his mail.  So perhaps for him, and for people in situations like his, home ownership is not a good investment.

On the other hand, my sister is living in Dallas with her husband, two kids, and three dogs while she waits to sell her home down here.  Nobody has to convince her and her husband that home ownership is the way to go.  They have bought and sold three houses since they have been married, and they are looking forward to the next one.  They know that they want to make Dallas their permanent home.  They understand the costs and responsibilities of home ownership; my brother-in-law does home maintenance projects on their homes as a hobby.  And they have an overall lifestyle that is consistent with providing a home for their family--not just a place to sleep at night.

The comparison between my brother's situation and my sister's makes me wonder how much lifestyle was a factor in the NAR survey.  The survey is a telephone survey of 1209 adults in 25 of the most populous metropolitan areas.  I wonder whether it takes into consideration whether the respondent is single or married and with or without children.  How many of the respondents are wondering whether their jobs will last?  How many of them would change jobs and perhaps change the cities they live in if the job market were better and they perceived they had better employment opportunities.  All of these factors influence the way that individuals perceive home ownership. 

When we see headlines saying "Support for Homeownership Falls Six Percent" we tend to see just another negative headline in a barrage of negative headlines about the housing market.  But we need to remember that each individual in that survey has his or her own story.  Homeownership is not a good investment for every person, but for a lot of people, owning a home remains very appealing.  And for all of those people, we in the real estate community need to keep the lights on.


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