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Homeowners still optimists

By Marcie Geffner · Bankrate.com
Monday, April 18, 2011
Posted: 10 am ET

"The five-year swoon in home prices has done little to shake the confidence of the American public in the investment value of homeownership."

That's the key finding of a new nationwide Pew Research Center survey that queried about 2,140 adults in late March.

Indeed, more than 80 percent of those polled said buying a home was "the best long-term investment" a person could make, though the intensity of that faith wasn't as strong as another poll found it to be 20 years ago.

Even so, "confidence at any level these days is notable," given that the U.S. housing market has been mired in a long and deep decline, the researchers observed in a statement.

Homeowners certainly weren't oblivious to the plunge in home prices, nor did they expect a speedy recovery, according to the survey's results. Almost half of the roughly 1,220 homeowners surveyed said their home was worth less now than it was before the recession. Thirty-one percent said their home had retained its value. Only 17 percent said their home was now worth more.

Of those who said their home was worth less, 86 percent expected to wait three years for values to recover. Forty-two percent expected a six-year wait. Ten percent thought a full housing recovery would take a decade or longer.

Still, 82 percent of those same homeowners said they believed either strongly or somewhat strongly that a home was the best long-term investment. Renters were less convinced, but a large proportion of them also agreed with the proposition. Eighty-one percent said they'd prefer to buy a home now or in the future. Only 24 percent said they were renters by choice.

Skeptics may find these results puzzling, since a wait of three, six, or -- wow! -- 10 years just to break even doesn't seem like an indication of a good investment.

The answer may be that homeowners are simply a very patient and long-term thinking bunch, operating on the belief that their home is bound to pay off one way or another, even if later, rather than sooner.

Or perhaps it's only wishful thinking.

Follow me on Twitter: @marciegeff

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5 Comments
M. Parker
April 20, 2011 at 5:29 pm

I don't think it's surprising that homeowners want to be optimistic about the value of their home. Who wants to look at their property, which they may or may not have purchased during the housing bubble, and say "Wow this is a bad investment?" It hits too close to home -- and the wallet. Paying a monthly mortgage hurts enough as it is when you know you're underwater. It's a matter of being optimistic that eventually you may get your money back, somehow. But for today's buyers -- a home is a home, not an investment. Lesson learned. There are some interesting articles out there about the heated debate on renting or buying.

Bob Lilley
April 19, 2011 at 8:08 pm

I think this is sadl. Most Americans "think home ownership is one of the best long term investments" but appear unwilling to take advantage of traditionally low rates and unbelievable home prices.

Any time the smartest guy in the room is the fellow who stuffed his money under a mattress, or anyone who thinks renting is anything close to an investment strategy really needs to rethink their position.

Dan
April 19, 2011 at 3:29 pm

I think that buying a hom to eventually make a profit is not a very good investment when compared to other options. However, I think many of the people responding are also adding the intangible values of homeownership. For example, I am a homeowner and know that I would probably be better off financially with renting, but having a space for my family and a place to record music away from noisy (or quiet-loving) apartment neighbors far outweighs the financial gain because I get to operate the home the way I want to. I don't have to ask permission to paint a wall or be limited to recording drums only at a certain time of day.

Jim Dwyer
April 19, 2011 at 11:31 am

The real estate industry hogwash appears to have had a profound impact on the witless fools.

MortgageBanker
April 18, 2011 at 7:32 pm

Not sure if this speaks to the intelligence of our society or the "wishful" thinking. But people should stop looking at their home as an investment.