84% of the general population believes that owning a home makes more sense than renting.
 
The Most Important Reasons to Buy a Home
 
When we talk about homeownership today, it seems that the financial aspects always jump to the front of the discussion. However, the study shows that the four major reasons a person buys a home have nothing to do with money. The top four reasons, in order, are:
 1.  It means having a good place to raise children and provide them with a good education
 2.  You have a physical structure where you and your family feel safe
 3.  It allows you to have more space for your family
 4.  It gives you control of what you do with your living space (renovations and updates)
 
The Home as an Investment
 
Though most people purchase a home for non-financial reasons, everyone realizes there is a money component to homeownership. Here is what they said on this issue:

• 63% of the general population believes that homeownership is a ‘safe’ investment.
• 53% believe that homeownership has more potential as an investment than any other traditional asset class.

Rent vs. Buy
 
We are always interested in the difference people see in renting vs. owning.

• 64% of renters have aspirations to someday own their own home
• 70% of renters think that owning is superior to renting

Bottom Line

Our belief in the value of homeownership grows each time this survey is released.

Original Source: The KCM Blog

Has the tide changed? Will Fannie Mae and Freddie Mac actually consider writing down principal for underwater homeowners?
 
Edward DeMarco, the acting director of the Federal Housing Finance Agency, has staunchly opposed principal reductions, arguing that his responsibility is to the agency's financial bottom line, and that bottom line is best served by lowering payments through forbearance, not writing down principal.

But he told The Wall Street Journal last week that his agency is rethinking its position in light of new incentives offered by the Treasury. He said the agency would make a decision by mid-April.
Some members of Congress, as well as other federal officials, are pushing hard for Fannie and Freddie to forgive principal on underwater loans, and DeMarco has been strongly criticized by people who disagree with him. Most Republicans, however, share DeMarco's opposition to writedowns.
 
According to the WSJ, it's likely that a Fannie and Freddie program would reach only about 300,000 homeowners – borrowers who owe more than 125% of their home's value and who are seriously behind on their payments.
 
"There's a set of homeowners who are deeply underwater and experience a hardship where it is better for the taxpayer to reduce principal," Treasury Secretary Timothy Geithner told members of Congress last week. "It's not an overwhelming number. But where it makes sense to do it, we should do it."

More than 35,000 borrowers received principal reductions last year, up from 29,000 in 2010 but down from 45,000 in 2009. Most of those are loans that the banks held on their books and did not sell to investors such as Fannie and Freddie. About 1.3 million mortgages were in foreclosure at the end of last year, the WSJ reports.

One fear that has contributed to DeMarco's opposition is that borrowers who are underwater but current on their payments will default just to get the amount they owe reduced. "What I'm really worried about is what happens if you put an incentive shift out there that says, 'If you can demonstrate hardship, you can have your debt forgiven,'" DeMarco told the WSJ.
 
Fear of such "moral hazard" has been one of the arguments against principal reduction. Opponents also argue that it's unfair to reward people who aren't making their mortgage payments but provide no equivalent aid to underwater homeowners who are paying on time.
 
The push for principal reduction has accelerated in recent months as more economists argue that writing down underwater mortgages is the quickest way to cut the number of foreclosures and bring the housing market back to normal.

Original Source: Realestate.msn.com

The broad and sustained growth of the apartment market contrasts sharply with an uneven and tentative housing recovery. During the first quarter, average apartment rents rose and vacancy rates fell in all 82 metropolitan areas tracked by Reis, when compared with a year ago.

The largest rent increases came in San Francisco and San Jose, Calif., which saw increases of 5.9% and 4.9%, respectively. Even boom-to-bust Las Vegas, which has struggled with falling rents in previous quarters, saw average rent rise 1.8% from a year earlier.
 
Such increases are one reason why analysts at Zelman & Associates believe 2012 will be the first year since 2005 when the share of apartment renters that moves out to buy a house increases from the previous year. "The equation of renting versus owning is becoming much more favorable for owning," said Ivy Zelman, the firm's chief executive.
 
Unless the economy worsens, there is little sign that rent growth will slow until hundreds of thousands of new apartment units currently under construction hit the market over the next few years.
 
Nishu Sood, a housing analyst with Deutsche Bank who tracks housing costs, says that, historically, the cost to rent an apartment has been about 10% lower than the after-tax cost of owning a home. That rental discount began to fall in 2010 and disappeared entirely last year. By the end of 2011, Mr. Sood's research found that the cost to rent an apartment was about 15% higher than the cost to own a home. Conditions are "overwhelming in the favor of buying now. It is unequivocal," he said.

In San Jose and the Silicon Valley, where home prices have tumbled 36% from the mid-2007 peak, home affordability has more than doubled in the last five years, Mr. Sood said. Affordability has also improved in Long Island and northern New Jersey, where during the boom, renting was half as expensive as buying. Now, it is almost equal.
 
To be sure, not all markets have seen the same development. In Orange County, Calif., and New York City, where home prices are extremely high, renting is still cheaper. But even in New York, real-estate agents say sales of small studio and one-bedroom apartments are brisk because renters don't want to pay such high amounts to rent.
 
"The entry-level market is back," said Dottie Herman, president of Prudential Douglas Elliman.
 
Jennifer Regan and her husband went under contract to buy a three-bedroom home in Martinez, Calif., last month. With a 4.25% rate on a 30-year fixed mortgage, their monthly payments, including taxes and insurance, will be around $600 less than what it costs to rent a comparable house. "I couldn't believe it had gotten so expensive" to rent, said Ms. Regan, 36 years old, who is moving before her oldest son starts school this fall.

It isn't always easy for individual home buyers to make it to the closing table, however. Lending and appraisal standards remain tight, keeping many would-be buyers out of the market. And aspiring buyers are competing with savvy investors who have turned buying and reselling foreclosed homes into a business. Last week, the National Association of Realtors trade group said the number of homes purchased by investors rose 65% during 2011 to 1.2 million, representing 27% of all sales.
 
And for some renters, the housing crisis has shaken their desire to become owners. "If I was going to buy, I feel like I would be just in the same problem that other homeowners are having with the market," said Laurel Slutsky, 24, who just renewed the one-year lease on her Chicago two-bedroom.

"Right now, all my friends and I are hopping around neighborhoods, and I don't see the benefit in buying and staying in one place."

 —Josh Barbanel contributed to this article.

Original Source: The Wall Street Journal