Only 23 percent of renters living in single family homes-where more than half the nation’s renters live today–believe that renting makes more sense than buying a home.
Yet difficulty getting financing, including bad credit, would keep most of them, 53 percent, from buying a home if they were going to move. Seventy-three percent of single-family renters say it would be difficult for them to get a home mortgage, with 33 percent citing their credit history as the biggest obstacle to getting financing.
The latest Fannie Mae National Housing Survey found that concerns about getting financing and about the direction of the economy has been growing steadily and workers now are increasingly afraid of losing their jobs.
The findings suggest that if workers’ fears prove true, widespread job losses will result in a new wave of foreclosures. Of the quarter (26 percent) of American workers concerned about losing their jobs in the next twelve months, 44 percent report having a home mortgage. Only a third of them (33 percent) say they have sufficient savings to weather a period of unemployment.
“Consumers are more cautious due to concerns over employment and household finances,” said Doug Duncan, vice president and chief economist of Fannie Mae, commenting on “As a result, consumer spending, which accounts for about 70 percent of the economy, ground to a halt in the second quarter. Consumers are more hesitant to take on additional financial commitments, and a setback to confidence means a setback to the recovery of the housing market.”
Thirty-one percent of minority mortgage borrowers report being underwater compared to 23 percent of non-minority mortgage borrowers. Thirty-five percent of minority borrowers say they are making a great deal of financial sacrifice to own, compared to 20 percent of non-minority borrowers.
Minority borrowers are more likely than non-minority mortgage holders to live in states with above-average levels of negative equity and are more likely to report lower family household incomes (44 percent say their family income in 2010 did not exceed $50,000, compared to 23 percent of non-minority borrowers).
“Survey data make clear the relationship between home purchase demand and concerns about the stability of employment. Dissatisfaction about the direction of the economy and related employment fears are damping demand to buy homes and slowing the recovery. People who believe owning is a better deal than renting are nonetheless planning to rent, at least until things improve it would seem,” said Duncan.
The survey also found that most Americans think it would be difficult for them to get a home mortgage today (53 percent), which increases to 71 percent among renters. While 51 percent of Generation X Americans (age 35-44) say it would be difficult for them to get a home mortgage today, the number increases to 59 percent among Generation Y (age 18-34). In line with previous quarters, 57 percent of Generation Y Americans (age 18-34) expect their personal situation to improve over the next year, compared to only 42 percent among Generation X (age 35-44) and 35 percent among Baby Boomers (age 45-64).