People want to buy houses, how can we help?

By
Real Estate Agent with Central Metro Realty 568764

January 27, 2011

A National Association of Realtors poll conducted this month found that both current homeowners and renters feel that buying a home is a positive choice.  70% of homeowners and 48% of renters strongly agree or agree that homeownership will help them acheive the American Dream, while 77% of homeowners and 55% of renters believe that owning a home will help them achieve their long term financial goals.  Even more telling is that 95% of homeowners and 72% of renters believe that over a period of several years it makes more sense to own a home.

If renters had to move in the next 6 months 50% of them would choose to buy a home rather than rent and 58% of renters think now is a good time to buy. 

So if so many renters feel this way why aren't they buying?  According to the poll the biggest obstacle renters feel they need to overcome is coming up with enough cash for the closing costs and the down payment (80%), this is followed closely by not being able to find and affordable home (71%) and not being able to afford the monthly payments (66%).  Ability to qualify for a mortgage (63%), concerns about job security (61%), knowing how much house they can afford (59%) and concerns that the home will drop in value after they purchase (50%) round out the list of obstacles that renters feel are standing in the way of home ownership.

82% of renters and 92% of homeowners believe that a high rate of homeownership strengthens the community.  This being the case what can be done to overcome the obstacles?  In addition to our standard role as Realtors to educate the buying public and steer them to other experts that can help, here's what I think the government should be considering:

1.  Providing some level of matching funds for downpayment savings accounts.  This could be structured like a 401K, say matching 50% of the savers contribution up to 12% of their salary.  Or maybe a savings bond type structure specifically for home purchases.  Maybe some of the TARP repayments could be used to fund these accounts, or a percentage of building permit fees.

2.  As for affordability we need to reeducate home purchasers on the availability of programs to help them buy and repair a "fixer", we also have to stress the model that was prevalent in my parents' generation of the "starter" house.

3.  Mortgage qualification, what a mess.  Remember when the banks would run the debt to income ratios and evaluate the prospective buyer's track record on repaying debt then make a decision about whether or not this borrower made sense for the bank's portfolio?  That seems to make sense to me.  I personally don't believe that mortgages should be commoditized or that banks should be able to sell their paper.  Fannie, Freddie, and HUD could go back to guaranteeing mortgages that meet their guidelines and all will be right with the world.

4. Job security is another biggie, this one just has to work itself out.  It's an economic cycle and we are unfortunately at the bottom of the wheel. 

So those are my ideas?  I'd love to hear yours.  Keep me posted.  By the way, here's a link to the study: http://www.realtor.org/statsanddata/homeownership/attitudes_homeown, I used the charts for this post:  http://www.realtor.org/wps/wcm/connect/07ecfa004579c5138bd0cb342c47dc89/attitudes_homeownership_exhibits_2011.pdf?MOD=AJPERES&CACHEID=07ecfa004579c5138bd0cb342c47dc89

Have a great day.

Tamara

Posted by

Tamara Elliott-Deering, Realtor, SRES

Central Metro Realty

512-629-3090, tamara@tamaradeeringrealtor.com

www.betterlifechange.com

Comments (6)

Kimberly A Norgard
Devlin McNiff Halstead Real Estate - East Hampton, NY

Tamara,  I enjoy statistics and thus really enjoyed the blog.  I think the points you make, 1-4, are good and sound.  We're selling in a different economic climate than that which we've been used to for many years.  Good job.  :)

Jan 27, 2011 12:15 AM
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co Notary Services retired RE Broker

Tamara, the biggest obstacle here in our little boom market is usually the point of a down payment so your point #1 is a strong one for me. Fortunately for us many of our buyers are VA and do not need a down payment but that still leaves a lot of buyers out in the cold.

Jan 27, 2011 12:33 AM
Shannon Coe
exp realty of California, Inc. - Oceanside, CA
760-586-5268, San Diego Realtor

Great Blog, now we just got to get the homeowners into homes, that all, easy....

Jan 27, 2011 01:19 AM
TERRY DRISCOLL
MAINE HOME REALTY - Bath, ME
REALTOR - Buy or Sell in Any Season!

Tamara, I saw that poll as well, and I think it bodes well for our industry.  I love that you are always thinking of ways to knock down those barriers!  Fortunately, in my area, we do still have 100% financing products available.

Jan 27, 2011 03:57 AM
Mary Yonkers
Alan Kells School of Real Estate/Howard Hanna Real Estate - Erie, PA
Erie/PA Real Estate Instructor

Tamara--Programs that encourage saving programs would be very helpful for home buying and retirement plans.  Unfortunately Americans want everything now rather than save for the future.  Some things are worth waiting for and saving for.  Good post.

Jan 27, 2011 11:35 AM
Tamara Elliott-Deering
Central Metro Realty - Austin, TX

Thanks everyone.

Terry, like you I come from the corporate world and it was beat into me not to bring up a problem unless you can propose a solution or you sound like a whiner.

Kimberly, I like statistics too, I can make them say anything I want them too!

Bob & Mary, I really believe that a down payment is important, I'm not entirely sure but I think that 100% down makes it way too easy to walk away.  I think it fosters a "rental" mentality, you know the one, "Don't worry, it's a rental" I use that on rental tools or for the latte that accidently gets spilled in the rental car.  Terrible I know but I think it's human nature.  That said, with .5% interest there is really no incentive to save, so I think we need to create one.

Shannon, thanks again for the re-blog.

Tamara

Jan 27, 2011 11:34 PM