Study reveals factors influencing consumers’ decision to buy versus rent a home

In a study to examine what factors would drive a person to rent or own in their next move, Fannie Mae found that 85 percent of Americans prefer homeownership over renting.

The Fannie Mae August 2012 Own-Rent Research survey, which analyzed Fannie’s monthly housing survey data for all of 2011, found that homeownership still appeals to the majority of Americans: 85 percent said owning makes more sense than renting over the long term, and 64 percent of those polled said that they would buy a home if they were going to move.

Researchers found that demographics such as income, age, marital status and employment are still considered significant drivers in the decision of buying a home or renting.

The study results also found that once consumers buy a home, get a mortgage and have a positive experience owning, they want to continue to own. But concerns about affordability – both for home purchase and upkeep – was a major factor that discouraged renters from taking the step.

“For renters and mortgage-owners, aspirations for and belief in home ownership play a major role in decision-making, possibly forming a ‘home ownership optimism’ in determining whether they expect to own or rent in the future,” the study said.

The authors of the report believe real estate professionals should address the underlying attitudes that drive homebuyer decisions by helping their clients balance their wants against what they can afford. Members of the research team say it’s important to educate and inform potential homebuyers since many of them may be ignoring their ability to safely buy a home.

Findings suggest:

• Americans are affected by a mix of demographic and attitudinal drivers in making the own-rent decision.
• It is possible that many of these drivers, especially attitudinal drivers, act as automatic or unconscious biases that lead consumers to their respective housing choices.
• Resources to help consumers more deliberately understand and balance these drivers may allow them to make better, more sustainable housing choices.
• Exposure to mortgage default, perceived home value appreciation/depreciation, and self-reported underwater status are not significant factors in the models in predicting individuals’ intentions to own a home for their next move.
• These results suggest that Americans’ aspirations to own a home are strong even facing the dramatic challenges in the housing market over the past few years.