The vast majority of people in the United States believe that buying a home is a good financial decision but many are concerned about affordability, new research has found.
Some 84% think that purchasing a home is a good financial decision, the highest number since 2007, yet six in 10 said that they are concerned about affordability and the rising cost of buying a home or renting in their area.
Housing affordability was ranked fourth in the top five issues Americans face in their area behind the lack of affordable health care, low wages and debt making it hard to save and heroin and opioid drug abuse, and ahead of job layoffs and employment.
The survey by the National Association of Realtors (NAR) found that nationally 44% of respondents categorised the lack of available affordable housing as a very big or fairly big problem.
In the top 25 densest markets, more than half see the lack of affordable housing as a big problem, an increase of 11% from the 2015 survey and those on lower incomes, renters and young women felt the housing pinch more acutely.
‘Despite the growing concern over affordable housing, this survey makes it clear that a strong majority still believe in homeownership and aspire to own a home of their own,’ said William Brown, NAR president.
‘Building equity, wanting a stable and safe environment, and having the freedom to choose their neighbourhood remain the top reasons to own a home,’ he added.
Eight out of 10 believe that the most important financial reason to own a home is that the money spent on housing goes towards building equity rather than to a property owner. Paying off a mortgage and owning a home by the time you retire is the next most important financial reason for buying a home followed by ownership being a good investment opportunity to build long term wealth and increase net worth.
When asked about the amount of down payment needed for a mortgage, four in 10 respondents believe that a down payment of 15% or more is necessary, 70% feel that a reasonable down payment should be 10% or less.
Misperceptions about higher down payment requirements were most prevalent in bigger cities and among older adults and apparent confusion about down payment requirements most likely added to non-owners concerns about affordability, the survey also found.
The median down payment for first time buyers has been 6% for three years in a row and 14% for repeat buyers in three of the past four years.
Over 505 of respondents strongly agree that home ownership helps build safe and secure neighbourhoods and provides a stable and safe environment for children and family members.
The survey also found that four in 10 Americans say paying their rent or mortgage is a strain on their budget. Those most likely to say their mortgage is a strain have incomes under $60,000, are residents of New York City or the Pacific coast, are under the age of 50 and non-white.
Just over half, 51% of respondents, said they were willing to strain their budget for a better living environment and would pick a neighbourhood with better schools and job opportunities even if housing prices are a bigger strain on their budget.
Those most willing to strain their budget are disproportionately married, upper income and living in the suburbs. Overspending on homes is more prevalent in North Eastern cities at 36%, the Mountain West at 34% and the Pacific Coast at 33%.
