Consumers’ Homeownership Aspirations Remain High Despite Higher Home Prices and Interest Rates

Understandably, how people define "living the good life" varies widely from household to household. Many prioritize financial security. Others point to health, location, work-life balance, or meaningful personal relationships. At Fannie Mae, because of the critical role we play in the housing market, we wanted to better understand how the desire to own a home relates to other life aspirations.

In the fourth quarter of 2020, Fannie Mae's Economic & Strategic Research (ESR) Group asked consumers which factors are most important to them as they consider "the good life" – defined by the survey as the "life they'd like to have." All but one of the eleven listed factors were very important to a large majority of people across all demographic groups.

Two years later, we wondered whether consumers' priorities may have changed following the pandemic, domestic and international unrest, and significant increases in interest rates and home prices.

To our surprise, we found that consumers' sense of "living the good life" has remained largely unchanged over the last two years, although there is interesting nuance when examining the data across race, age, income, and homeownership status.

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Aspirations of Homeownership and the Associated Benefits

Consumers once again ranked financial security and good health at the very top of their "good life" list. Owning a home remains very important, with 86% of respondents saying so, but it ranked sixth out of the eleven possible options, roughly on par with having good friends (90%) and having a happy marriage or romantic relationship (86%). Additionally, more than twice as many consumers consider owning a home to be important compared to "owning really nice things," such as cars, electronics, jewelry, or clothing (36%).

Looking at the data across racial and homeownership status lines, a greater share of Hispanic renters (92%) consider homeownership to be important than Black renters (79%) and White renters (74%).

Additionally, our survey asked consumers to consider the financial and non-financial (or lifestyle) benefits derived from either owning or renting. Respondents overwhelmingly indicated that owning a home was preferable to renting in every aspect listed. The top three were having control over what you do with your living space (94%) to having a sense of privacy and security (91%) and having a good place for your family or to raise your children (90%) – all of which were essentially unchanged from the 2020 survey. "Having less stress" brought up the rear at a still-commanding 66%, up 10 percentage points from 2020.

In fact, associating homeownership with "having less stress" was one of the biggest shifts between the two most recent data sets. It was particularly true among renters (60% in 2022 compared to 40% in 2020). One possible explanation is that many renters have experienced significant rent price increases and, despite declining home purchase affordability, view a fixed mortgage payment as less stressful. Another is that homeownership may be perceived as offering greater privacy and security than renting, a lifestyle benefit that may have proved especially desirable three years into a pandemic.

Another statistically significant change between the two surveys: In 2022, 88% of Black consumers viewed "living in a place where you and your family feel safe" as a benefit of homeownership, significantly higher than two years ago (72%). For context, the percentage of the general population that listed that particular benefit also rose over the two-year period, but slightly less (from 83% to 88%).

Investment Safety and Financial Potential

Our research also found relative stability in how consumers continue to view homes as an investment since 2010 when we started asking these questions. Overall, most homeowners (76%) in 2022 believed buying a home is a safe investment, though renters (59%) were a bit more skeptical of that position. The two groups were far more aligned when it comes to believing that buying a home has a lot of potential (75% homeowner, 70% renters) – survey highs for each.

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Unsurprisingly, given the financial market turbulence during the survey period, the general consumer view in 2022 of the safety of different investment options – including homes, mutual funds, money market/savings account, stocks, and government/corporate bonds – fell across the board compared to Q4 2020. Notably, this data was collected several months before the eventual collapses of Silicon Valley Bank and Signature Bank, which we believe likely further diminished consumer banking sentiment.

Consumers' Enduring Aspiration to Own a Home

With many, including us, predicting a recession, the resiliency of consumers' perceptions of homeownership relative to other investment options is noteworthy, especially during the previous three-year period of significant economic uncertainty. The survey data shows that consumers see homeownership as helping to deliver on a sense of financial security, which was also tied as the primary factor associated with the "good life." In fact, homeownership has strongly persisted as a perceived leading source of financial benefits dating all the way back to 2010, when we began the National Housing Survey.

Given the consistency of our survey results, we expect consumers' longstanding and highly favorable attitude toward homeownership as an investment option will continue to persist, even in the face of possible recession. Finally, in further support of homeownership's enduring appeal, our data showed clear non-financial benefits to owning a home, as well, that we believe provide additional dimensions of value for consumers that, for the most part, other financial assets do not confer.

Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's Economic & Strategic Research (ESR) group included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR Group bases its opinions, analyses, estimates, forecasts, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, and other views published by the ESR group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.