A new US National Housing Survey that has been conducted in order to take the pulse of the public’s current attitudes toward housing, especially in light of the current housing crisis, has found that two-thirds of Americans still want to own a home.

The research project asked more than 3,000 consumers about their confidence in homeownership as an investment, the current state of their household finances, their views on the U.S. housing finance system and their overall confidence in the economy.

“Despite the recent downturn in the housing sector, Americans continue to value homeownership and think about their homes in ways that go much deeper than the financial investment,” said Mike Williams, President and CEO, Fannie Mae. “The public also strongly believes in the importance of upholding the financial commitment involved in buying and owning a home, even during these challenging times when home values have fallen.”

The survey revealed that homeowners and renters alike are taking a more cautious approach to homeownership. Nearly a quarter of renters polled (23 percent) say they will buy a home later than once planned. In addition, Americans with traditional, fixed-rate mortgages with predictable payments are significantly more satisfied than those with other types of mortgages. Respondents cited non-financial reasons such as safety (43 percent) and quality of local schools (33 percent) as driving factors in wanting to own a home, ahead of financial considerations.

“Consumers are still committed to owning a home, but are showing increased cautiousness, regardless of whether they rent, own their homes outright or have a mortgage,” said Doug Duncan, Vice President and Chief Economist, Fannie Mae. “They are rebalancing their attitudes toward housing and homeownership by adopting a more realistic, long-term approach, and are less willing to take risks. This focus on sustainable housing is better for the economy, better for the housing market and better for America’s families.”

A majority of consumers (60 percent) believe that buying a home today is harder than it was for their parents, and nearly seven in ten (68 percent) think it will be even more difficult for their children. Most respondents (88 percent) also believe that walking away from an underwater mortgage is not acceptable, but those who know someone who has defaulted are more than twice as likely to have seriously considered stopping payments on their mortgage.

Below are some of the key findings from the survey:

• 80% of respondents consider homeownership important for the economy.

• 73% think housing prices will go up or stay the same over the next year, including 37% who think prices will increase and 36% who feel prices will remain about the same.

• 70% believe buying a home continues to be one of the safest investments available. This compares to 74% who think putting money into a bank account (money market or savings account) is safe.  In contrast, only 17% believe buying stocks is a safe investment.

• Americans with 30-year fixed-rate mortgages are significantly more satisfied (93%) than those with other types of mortgages (76% for those with hybrid ARMs and 68% for those with ARMs).

• 88%, including seven in ten who are delinquent on their own mortgages, do not believe it is acceptable for people to stop making payments on an underwater mortgage, while 8% believe it is acceptable.

• However, when asked if financial distress makes stopping payments on an underwater mortgage acceptable, 15% of respondents said yes.

• Both delinquent mortgage borrowers and those current on their mortgage payments are more than twice as likely to have seriously considered stopping their payments if they know someone who has already defaulted.

For more information about the survey, please visit:
http://www.fanniemae.com/about/housing-survey.html

A few observations related to the US economy which might give us a better sense of where we are in the cycle.

• We are starting to see some signs that the US housing market is entering another slow period after improving briefly due to government stimulus. Existing home sales have been slowing in recent months and new home sales activity hit a new record low of 308K annualized units in February, after marking a previous low the prior month. Overall, sales dropped 2.2% from an upwardly revised decline of 8.7% in January. This series has been contracting since November despite generous tax credits and an improved macro-economic outlook.

• Commercial real estate prices rose in February for the third straight month. The Moody’s CRE price index is a repeat sales index like Case-Shiller—but there are far fewer commercial sales—and that can impact prices. Note that commercial real estate prices are now back to the level seen in 2001 (when adjusted for inflation). But a quick glance at the fundamentals of the market in 2001 suggests that the current recovery in prices is unsustainable. For example, today there are 3 million less people working and office vacancy rate is 10 percentage points higher than it was in 2001. There is much more supply today than earlier in the decade and credit is much less available.

• As a preview of what we might see in the coming years, U.S. Treasury yields rose notably this week after the government’s auctions of two, five, and seven-year notes were all met by weaker demand than usual. Bid-to-cover ratios, a gauge of demand, was lower than it has been in four months.

• It is interesting that while the US debt market is starting to show some early signs of distress, emerging credit markets were able to shrug off turmoil in some fiscally strapped nations, posting gains over the past few weeks.

• Bernanke made it very clear that he wants the Fed’s balance sheet to return to its pre-panic form, when it was composed mostly of Treasury securities. However, that might be easier said than done. The composition of the maturity dates of the securities held by the Fed will make it difficult to deflate the Fed books in the near term. The Fed has roughly $1.25 trillion in securities maturing in more than 10 years, accounting for about half of its balance sheet. For comparison, there are between $150 billion and $200 billion in securities that will mature over the next year. It will take years to return the balance sheet to its pre-crisis size.

Benjamin Tal
Senior Economist

The Office of Energy Efficiency’s (OEE’s) ecoENERGY Retrofit program is granting financial assistance to implement energy-saving projects.

The program is directed at reducing energy-related greenhouse gases and air pollution, leading to a cleaner environment for Canada.

Homes program offers grants to owners of low-rise residential properties defined under Parts 2 and 9 of the National Building Code of Canada. These include single detached and attached homes (e.g. row housing, duplexes and triplexes), small multi-unit residential buildings including some small apartment buildings of three storeys or less built on a maximum footprint area of 600 square metres or less. Mobile homes on a permanent foundation and floating homes permanently moored also qualify.

As a home owner you must follow the following steps in order to apply:

1. Before you undertake any energy efficiency renovations, hire a Natural Resources Canada certified energy advisor to perform an energy evaluation of your home. The advisor will give you a pre-retrofit evaluation report and an EnerGuide rating label for your home.
2. Select your improvements and implement the recommended energy upgrades, leaving time to ensure your post-retrofit evaluation is completed within 18 months or before March 31, 2011, (whichever comes first and subject to available funding).
3. Call your energy advisor to perform your post-retrofit evaluation, to confirm your new energy rating and to submit your grant application.

There are also other different variations of the ecoENERGY Retrofit program designed for commercial, institutional and industrial buildings.

The program ends on March 31, 2012 or when all funds are committed.