GAINESVILLE, Fla. – Feb. 16, 2017 – Homeownership nationwide is at a record low, but a slim majority of Floridians (50.1 percent) say it’s a good time to buy a house, according to a newly released University of Florida (UF) survey conducted in October and November. Only 19.3 percent thought it was a bad time, while the remaining 30.6 percent were uncertain.
A recently report from the U.S. Census Bureau found that the Florida homeownership rate dropped 8 percentage points to 64.4 as of 2016 – the lowest since the government started tracking the rate in 1984. Florida’s homeownership rate peaked at 72.4 percent in 2006 on the beginning fringe of the Great Recession.
However, the Florida homeownership rate is still higher than the U.S. rate, as it was before the Great Recession hit. The U.S. homeownership rate peaked at 69.0 percent in 2004 before falling 5.6 percentage points to 63.4 percent in 2016.
Reasons to buy
Among the survey respondents who favored buying a home now, the most common reason given was favorable interest rates (46.1 percent), a situation that might change in the months ahead as the Federal Reserve increases rates.
Other reasons are low home prices (18.7 percent), the availability of many homes (13.6 percent) and favorable economic conditions (12.4 percent).
Of those who thought it was a bad time to buy a house, unfavorable economic conditions topped the list (41.5 percent) followed by high house prices (31.1 percent) and difficulty qualifying for a mortgage (11.4 percent).
Opinions varied by gender, with “good time” chosen by 52.4 percent of men but only 47.2 percent of women. Positive attitudes also increased with age: 37.9 percent of young adults under age 30 said “good time” compared with 54.4 percent of those age 60 or older.
Why buy a home?
A home purchase depends largely on economic conditions and the purchaser’s lifecycle factors, such as forming a household or the exit of young family members from the home.
“Homeownership is seen as an important way to accumulate wealth and build assets over time, in particular among low-income and minority groups,” says Hector H. Sandoval, director of the Economic Analysis Program at UF’s Bureau of Economic and Business Research and an author of the study. He says some Floridians may not have the means to invest in the stock market, but their home will likely appreciate in value over time, provide a legacy to the next generation and could be used as collateral for a loan in times of need.
Regardless of volatility in house prices and maintenance costs, owning a home is not only associated with personal financial gains, but it also benefits the community.
“Homeowners have greater incentive to care about their community because their home values depend on both the physical characteristics of the house and the neighborhood,” Sandoval says.
The American Dream?
Since World War II, homeownership has been considered part of the American Dream. Is that dream still alive in Florida?
In the survey, 45 percent of Floridians strongly agreed (14.2 percent) or agreed (30.8 percent) that “owning a home is necessary to live The American Dream.” Over a quarter (26.8 percent) neither agreed nor disagreed, while 21.4 percent disagreed and 6.8 percent strongly disagreed.
There were significant differences by race and region regarding homeownership and the American Dream: 42.7 percent of whites agreed or strongly agreed compared with 51.5 percent of non-whites. Only 38.2 percent of those in North Florida agreed or strongly agreed, but over half (50.5 percent) of those in Southeast Florida agreed.
The survey sample included 362 non-owners who were also asked about their own likelihood of buying a house. Almost a third (32.3 percent) said they were unlikely to ever buy a house, while 10.8 percent planned to buy in the next year, 44.5 percent in the next five years and 12.4 percent in the next 10 years.
“Following the Great Recession, mortgage lending practices tightened,” Sandoval said. “Slow job growth together with the debt load of young adults, many of whom are paying down student loans, have prevented the entrance of new buyers to a rebounding housing market.”
Source: Florida Realtors