Concerns over housing affordability show clear demographic divides, especially among unmarried and non-white Americans, according to the National Association of Realtors (NAR) 2017 Nation Housing Pulse Survey.
The survey found that more than five out of 10 unmarried and non-white Americans view the lack of available affordable housing as a big problem compared with only 40% of married and white Americans. In addition, although 84% of Americans now believe that purchasing a home is a good financial decision – the highest number since 2007 – 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 car, low wages and debt making it hard to save, and heroin and opioid drug abuse and ahead of job layoffs and employment, NAR says.
Nationally, 44% of respondents categorized 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 percentage points from the 2015 National Housing Pulse Survey. Low-income Americans, renters and young women most acutely feel the housing pinch, the survey found. There is also greater concern about affordable housing among the working class (65%) than for public servants, such as teachers, firefighters or police (55%).
“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. Building equity, wanting a stable and safe environment, and having the freedom to choose their neighborhood remain the top reasons to own a home,” says NAR president William E. Brown.
Eight out of 10 believe that the most important financial reason to own a home is that the money spent on housing goes toward 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, the survey showed.
When asked about the amount of down payment needed for a mortgage, four in 10 respondents said that a down payment of 15% or more is necessary. Seventy percent feel that a reasonable down payment should be 10% or less, according to the survey. Misperceptions about higher down payment requirements were most prevalent in bigger cities and by older adults.
Apparent confusion about down payment requirements most likely added to non-owners’ concerns about affordability. NAR’s Profile of Home Buyers and Sellers found that the median down payment for first-time buyers has been 6% for three straight years and 14% for repeat buyers in three of the past four years.
Over 50% of respondents strongly agreed that homeownership helps build safe and secure neighborhoods 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 are non-white.
Just over half, 51%, of respondents said they are willing to strain their budget for a better living environment and would pick a neighborhood with better schools and job opportunities, even if housing prices are a bigger strain on their budget. Those most willing to strain their budget, the survey found, are disproportionately married, upper income and living in the suburbs. Over-spending on homes is more prevalent in Northeastern cities (36%), the Mountain West (34%) and the Pacific coast (33%), according to the survey.