By Mike Colpitts
A sinking economy and declining home prices are eliminating urgency for most homeowners and renters to buy homes, despite record low the mortgage rates, according to a new study. But doubling up or living with adult children, relatives or parents has increased more than since the days of the Great Depression.
Nearly one in three or 30% of respondents to the Hanley Wood housing survey taken by more than 3,000 U.S. homeowners and renters said they had doubled up their living arrangements with relatives. The study provides insight on the changing dynamics in the U.S. housing market and the broader economy as the nation copes with the worst economic downturn since at least the Great Depression.
The survey also found why so many renters and homeowners are not taking the plunge to make new home purchases. Major issues present stumbling blocks for renters and homeowners, including tougher mortgage qualifying standards required by banks, larger down payments, concerns over the broader economy and job security.
However, despite the downturn in the economy, 87% of homeowners and 73% of renters surveyed feel homeownership is important for the U.S. economy.
Both renters and homeowners strongly felt that now is a good time to buy a home with lower home prices. Slightly more than one in four or 29% of renters and 19% of owners who responded to the survey say they are considering the purchase of a new home in the next two years.
“There are obstacles in the way of home buying. The overcorrection in the mortgage market is a drag on the process,” said Kent Colton, a senior fellow at Harvard University Joint Center for Housing Studies. “We’ve gone from one extreme to the other and it’s stalling the housing market and therefore the economy.”
The survey also found that up to 2-million potential home buyers are waiting to purchase a home when they feel the time is right. Nearly one in four or 72% of homeowners said it was a good time to purchase a home, while only 59% of renters said they felt it was a good time to buy property.
However, respondents didn’t give such high marks to new home buying. Only 12% of renters and 29% of homeowners said they would prefer to purchase a new home instead of purchasing a resale or used home given all the problems with new home construction experienced during the housing bubble.