TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/81279
THE PULSE Inside the Mind of the Contemporary Consumer An August study from Fannie Mae's Economic and Strategic Research Group (ESR) reveals what really influences a consumer's decision to buy a home instead of joining the rent race. Looming Questions To find out what contemporary consumers believe about the advantages of owning ver- sus renting a home, the ESR Group focused on three key questions. 01 What factors influence consumers' cur- rent homeownership status; are they currently homeowners or renters? 02 choose to own or rent if they were to move? 03 What factors drive consumers' intentions to buy or rent in the future; will they renters, current homeowners with a mortgage, current homeowners without a mortgage? How do the factors differ among the fol- lowing three population groups: current Defining Demographics What defines the survey's three groups of core participants? The ESR team breaks down their characteristics. • RENTERS: Younger, more likely to be single and have lower income, less likely to be employed full-time • MORTGAGE-OWNERS: More likely to be middle-aged, employed full-time, married, and have higher income • OUTRIGHT-OWNERS: Older, more likely to be retired, widowed, and past their peak earning years Tallying the Transitions ≥ Fannie's ESR Group cataloged the respondents' answers regarding their current homeowner- ship status, and the group's findings show the connection between "life stage progression" and consumers' housing decisions. Here, MReport is revealing the majority percentages for each of the study's four critical evaluating factors. 18 | THE M REPORT Does Race Play a Role? ESR's statistics examined the relationship between white, African-American, and Hispanic consumers to determine how a person's race may impact housing decisions if he or she were to move. WHITE: Nearly 70% would buy upon moving AFRICAN-AMERICAN: Around 55% would buy upon moving HISPANIC: Just more than 60% would buy upon moving Moving On Seeking to determine what catalysts exert significant influence on a consumer's "next move," ESR presented percentage rankings that reveal the impact that de- mographics, sentiments, and experiences may have on future housing decisions. Current Housing Status: 79% cite demographic factors Future Status as Renters: 42% cite attitudes about housing Future Status as Mortgage- Owners: 40% cite attitudes about finances Future Status as Outright- Owners: 65% cite demo- graphic factors Predicting Consumer Behavior Applying numerical values to the impact that specific attitudes about housing have on a consumer's likelihood to purchase a home, ESR's data shows what factors mean the most when forecasting behavior; the percentages displayed here represent the "share of impact" that each issue has on a consumer's housing choice. {38% Income status } {10% } {5% Core belief on the financial advantages of owning vs. renting } Difficulty or ease of getting a mortgage {2% } derived from homeowner- ship Financial benefits ABOUT THE SURVEY: Opinions, analyses, estimates, forecasts, and other views of Fannie Mae's Economic and Strategic Research (ESR) Group included in this research brief should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR Group bases its opinions, analyses, estimates, forecasts, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, and other views published by the ESR Group represent the views of that group as of the date indicated and do not necessarily represent the views of Fannie Mae or its management. Age MORTGAGE-OWNERS 35-49 years old {46% {41% {46% RENTERS 18-34 years old } } } OUTRIGHT-OWNERS 65+ years old Employment Status full-time employees MORTGAGE-OWNERS full-time employees {47% {64% {49% RENTERS } } } OUTRIGHT-OWNERS retired less than $25,000 MORTGAGE-OWNERS $50,000–$100,000 {43% {39% {49% Income (annually) RENTERS } } } OUTRIGHT-OWNERS $50,000–$100,000 Marital Status MORTGAGE-OWNERS married or w/partner {41% {77% {60% RENTERS single } } } OUTRIGHT-OWNERS married or w/partner