Minorities and Young Keep Homeownership Dream Alive

Fannie Mae’s latest National Housing Survey found that younger Americans, Hispanics, and African-Americans are generally more positive about owning a home than the general population even though Generation Y (ages 18-34) and minorities suffered the steepest decline in homeownership over the past five years.

Fifty-nine percent of Gen Yers believes buying a home has a lot of potential as an investment, even though this age group has seen their homeownership rate fall forty-four percent when home prices peaked to fewer than forty percent in 2009. The survey, which was conducted from October 15 to December 10, found that Generation Y aligns closely with other generations when considering reasons to buy a home, but assigns a slightly greater value to its impact on their societal status, as a place to raise children, and the potential to build wealth through ownership.

Twelve percent of Generation Y Americans say they live with someone and do not pay for housing and 36 percent are homeowners.  Among Gen Xers, homeownership goes up to 73 percent, 79 percent among Baby Boomers, and to 85 percent among elderly Americans.

More than one-third of Hispanics (34 percent) and African Americans (35 percent) say they will buy a home in the next three years, compared to only one in four (23 percent) of all other Americans.   Yet homeownership among Hispanics has fallen from 50.1 percent in 2007 to 46.8 percent in the fourth quarter of 2010 and among African American households down 48 percent to 44.8 over the same period.  Among all Americans, homeownership has fallen from a high of 69 percent in 2004 to 66.6 percent. according to the Census Bureau. (See Homeownership Tanks to 12 Year Low.)

In the survey, Hispanics assigned greater value than Caucasians to 14 of the 15 tested reasons to buy a home.  These included the belief that owning a home is a symbol of success or achievement, that owning a home gives one something to borrow against if needed, and that owning a home is a good way to build up wealth that can be passed along to family.

African-Americans also valued homeownership because it allows one to live in a nicer home, is a good retirement investment, is a good way to build up wealth that can be passed along to one’s family, and because it motivates one to become a better citizen and engage in important civic activities like voting, volunteering, and contributing to charities.

The survey also found that Americans are more confident about the stability of home prices than they were at the beginning of 2010, even though they lack confidence in the strength of the economy:

Seventy-eight percent of respondents believe housing prices will hold steady or increase over the next twelve months, up from 73 percent in January 2010;

But almost two-thirds (61 percent) still believe the economy is on the wrong track, a number which is virtually unchanged from the beginning of last year.

“Over the course of the last year, we gained deeper insights into Americans’ confidence in the strength of the housing market and the economic recovery,” said Doug Duncan, Vice President and Chief Economist of Fannie Mae. “More Americans believe that housing prices will remain stable over the next year. We also are seeing encouraging signs in the positive attitudes toward homeownership among younger Americans, despite the severe impact of the housing crisis on Generation Y. But most respondents to our survey continue to lack confidence in the strength of the economic recovery, and they are less optimistic about their ability to buy a home in the years ahead. This sense of uncertainty is weighing on the housing recovery today and reshaping expectations for housing for the future.”

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