A new survey shows plenty of pent up demand for home buying, but the market must evolve
After a painful pop, the ugly aftermath of the housing bubble has been felt across the U.S. Despite the problems it caused, however, it didn't do much to reduce Americans' desire to own a home. A new survey conducted by Harris Interactive on behalf of online real estate resource Trulia shows that 70% of Americans still view home ownership as a part of the American Dream. The percentage is unchanged from January. But the Americans' specific preferences for home ownership are shifting.
Leaving the Suburban McMansions Behind for Modest, Urban Homes
One of the most significant findings was that Americans are no longer interested in giant houses. The survey shows that, even compared to last year's survey results, the ideal home is shrinking. The portion who preferred a home bigger than 3,200 square feet declined by one-third. Meanwhile, 32% of respondents said that their ideal-sized home was 1,401 to 2,000 square feet. That's the biggest portion of respondents of any of the survey's five size categories and is up from 28% a year earlier.
Cities are also becoming more attractive to Americans. The survey found that short commutes are a very high priority among Millennials, as 57% wanted to live near urban centers. That might not be surprising, but this is: Baby Boomers share the sentiment. A majority of respondents in this generational category said that they intend to buy another home, which would ideally be nearer to more restaurants and shops. Suburban life may be fading.
The implications here are clear: future home building will likely look pretty different from what it looked like during the bubble. Instead of suburban McMansions, we'll see more smaller homes and condos being built in cities to accommodate this growing demand.
Ownership Still a Goal
The survey also revealed a great deal of pent-up demand. It found that 80% of current home owners intend to buy another home in the future and 59% of renters plan to one day own a home. On a generational basis, the desire to own a home appeared to be somewhat proportional to age. Younger age groups were a little less interested in homeownership, while older age groups strongly felt strongly about the value of owning a home.
So if so many people want to buy a home, what's stopping them? The common reason you see cited these days is falling home values. But according to the survey, this factor is a relatively minor part of the story: just 13% of respondents named declining home values as an obstacle to home ownership.
The biggest problem was saving for a down payment. Of those polled, 51% said that this was a major obstacle. This provides some room for policy to enter the equation. One option could be for underwriting to allow lower down payments, but that strategy was shown to do more harm than good during the housing bubble. A better alternative could be tax-free or subsidized savings plans to help Americans to put more money aside for a down payment.
Ultimately, the survey should provide some reason for real estate professionals to exhale. The current slump is just that -- a slump. Eventually, home sales will rebound and so will building. The problem, of course, is that no one is quite sure how long it will take for the market to eventually find its footing.
Image Credit: Amy Beth Connick