Imagine our surprise when the results of a Fannie Mae survey sounded like one of our recent postings. Apparently something big is happening with consumer attitudes and housing!
Ok, just for fun, we have to point out a Fannie Mae survey that sounds an awful lot like it came directly from blog. In “Are you ready for a drop in first time buyers?” we reiterated our belief that the next generation of buyers (Gen Y) won’t act like their parents’ generation (Baby Boomers) when it comes to housing. Fannie’s survey results hit HousingWire on Dec 9th; Our entry was published on the 7th.
It is nice to see we’re not crazy.
Fannie Mae’s report is titled “Housing Choices throughout the Lifecycle and the Impact of Changing Deomgraphics” and all we can add is: No kidding? And we didn’t charge the taxpayer a penny for our conclusions. In our analysis, we discussed with Steve Harney that while Gen Y still “believes” in the American Dream, it looks like many will be deferring that dream a lot longer than their parents did, creating a “vacuum” in replacement population of first-time buyers.
Were we nuts? Here are the highlights from Fannie Mae’s survey (from HousingWire):
Although 51% of survey respondents said the housing crisis has not affected their overall willingness to buy a home, 33% said they would be more likely to rent their next home than buy. In January, 30% of Americans surveyed said they would rent a home the next time around.
- 89% of homeowners, as well as 49% of renters, feel they would be better off owning a home in the current economy
- The homeownership rate among young adults (ages 25 to 29) decreased 11% “since peak rates” before the housing crisis
- Married couples are the most likely to own a home… but only 50% of households were married couples, down from 56% in 1990
- 78% of respondents said children were a major reason to own a home, however, the percentage of families with children is at an all-time low of 49%
- 57% cited financial benefits as the best reason to rent
- 29% said lifestyle benefits were the biggest perk to renting
- People 50 and older hadn’t changed their sentiments towards home ownership in recent years
And the final sentence in the press release:
A person ages 65 to 74 is 3.5 times more likely to own a home than a person under 25.
So while home ownership remains an “overall” winner it’s clear that changing demographics and lifestyle choices (and a recession) are changing people’s minds about housing. This includes people of the “traditional” age for first time purchases, as well as current owners who might rent next time rather than buy again.
There’s a huge shift in attitudes underway regarding home ownership in America.
In my experience, consumer sentiment trumps reason when it comes to big purchase like housing. Emotions trumped reason during the boom; it will trump reason during the bust. And after it. Generally, people buy with their gut first, their wallet second and their brains third. It’s why we argued in our last entry:
…if Gen Y’s behavior cannot be stimulated by mere tax policies, because what they value has changed when they will integrate home ownership into their lifestyles, how will a generation of real estate agents define their value proposition? Will offering a “Free School Report” mean anything to future buyers? What happens if the “rent vs buy” argument isn’t as important as the “save the planet” argument or some more basic reason why the Global generation might not want to be “tied down” for the next fifteen years?
This is the most important challenge facing real estate professionals for years to come. QR codes or Facebook or tablet computers won’t solve this problem because it’s not about process. New marketing won’t make a difference, because the “buy, don’t rent!” message can’t be heard whether on postcards or smartphones. Which “script and dialogues” will explain why a twenty-something can’t take a job in Tokyo because the market in Florida is overwhelmed?
The value of housing – financially and emotionally – is different than in the past. We don’t get to determine it – consumers do. And it’s clearly different than what many in the real estate industry believe is valuable.
Most agents – average aged 54 – still think it’s “better” to buy than to rent. Better is a value judgement their customers might not agree with.
When next generation consumers value something different than what you were trained for – or personally believe – call a time out. When the game is shifting in our heads, all bets are off. And it means the future of housing is going to be one heck of an exciting place!