October 11, 2011 (Shirley Allen)
Despite the lowest interest rates in over fifty years and falling home prices, the biggest obstacle to owning a home in America is still the same today as it was five years ago, and even ten years ago…the down payment.
Fifty-one percent of renters in the biannual American Dream survey by Trulia said that saving for a down payment was the biggest obstacle in buying a home. That was especially true for young adult’s ages 18 to 34 years old, with 62 percent saying that the lack of a down payment was keeping them from buying a home.
The other obstacles to buying a home cited in the survey were: qualifying for a mortgage (36%), having a poor credit history (34%), unable to pay off existing debt (31%), not having a stable job (29%), declining home values (13%), and other (12%).
Homeownership continued to be a sign of achievement in America as 70 percent of the Americans surveyed said that homeownership is part of achieving the American Dream. The survey’s results matched the percentage in last January’s poll.
Fifty-seven percent of current homeowners said that owning a home was one of the best long term investments they could make, while 80 percent said they would buy another home in the future.
Older age groups were found to be more likely to view homeownership as part of the American Dream. Seventy-six percent of the respondents 55 years of age and older viewed owning a home as part of the American Dream, while 74 percent of those between 45 and 54 felt the same way.
Sixty-six percent of those between 35 and 44 felt that being a homeowner was part of the American Dream while 65 percent of the Americans between the ages of 18 and 34 felt the same way.
“From saving enough for a down payment to qualifying for a mortgage and having a poor credit history, today’s aspiring homeowners face many financial obstacles in order achieve their American Dream of homeownership,” said Jed Kolko, Trulia’s Chief Economist. “These obstacles keep some would-be homeowners from taking advantage of low mortgage rates; on the other hand, they prevent some people from buying homes they can’t really afford. Government homeownership policies can target some of these obstacles to homeownership, but only stronger economic recovery will help households facing multiple obstacles become better able to buy homes.”
Downsizing was also on the minds of Americans as home size preferences have changed post-housing bubble leaving Americans thinking smaller is better. The percentage of Americans who said their ideal home size is more than 3,200 square feet dropped 36.5 percent from 2010 to 2011.
During the same time period the percentage of Americans who said their ideal home size was between 2,601 and 3,200 square feet dropped 10.1 percent.
Older Americans said they were more likely to want a home near restaurants and shops if they were to buy a new home while younger buyers said they would opt for a home that gave them a shorter commute.
Tags: Trulia, down payment, low mortgage interest rates, falling home prices, the American Dream, homeownership