Americans Want More Government Involvement in Lending, NAR Survey Shows

November 11, 2008

With an unstable American economy and slowdowns in the housing market, most consumers are open to the federal government taking a more active role in overseeing mortgage and lending practices, according to the 2008 National Housing Pulse Survey, an annual survey released by the National Association of Realtors®.

The survey, which measures how affordable housing issues affect consumers, also found that affordable housing concerns are the lowest in six years of polling.

“As the leading advocate for homeownership and housing issues, NAR has supported more government oversight in lending as a result of abusive and predatory lending practices that have caused families to lose their homes and savings and led to increased foreclosure and vacancy rates,” said NAR President Dick Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif. “The survey also clearly shows that falling home prices have improved housing affordability, allowing many Americans – some of whom may have been priced out of the market a few years ago – to achieve the dream of homeownership.”

More than half of those surveyed (56 percent) favor the federal government taking a more active oversight role in lending and mortgages, while 38 percent prefer that private companies oversee their businesses. That is a marked shift from the 2007 survey, which showed respondents were more evenly split on the issue of government involvement.

With home prices down in many parts of the country, concerns about the lack of affordable housing are the lowest they’ve been in six years of polling (39 percent); down from 48 percent last year and the survey high of 51 percent in 2005.

Nearly eight out of 10 consumers believe the country is headed in the wrong direction, and a majority (55 percent) rates the current state of the economy as poor. Survey respondents don’t expect to see improvement in the economy anytime soon either; more than two-thirds believe the economy will stay about the same or get worse over the next year.

Regarding the economy, Americans are most concerned about high energy costs including gasoline and utilities, followed by inflation and higher priced staples such as groceries, increased health care costs, job security and reduced wages, as well as challenges in the housing market, including foreclosures and reduced home values.

Despite troubles with the economy and difficult housing news, Americans remain surprisingly confident about the housing market. Eighty-five percent of respondents believe buying a home is a good financial decision, down 2 percent from last year. Two-thirds of Americans believe now is a good time to buy a home, up nearly 12 percent from 2007.

“Homeownership offers immediate benefits and long-term value, and despite recent slowdowns in some markets, consumers continue to believe that now is a good time to buy a home,” Gaylord said.

When it comes to challenges facing their communities, Americans are less concerned about the lack of affordable housing than a lack of affordable health care options, job layoffs and unemployment. This year’s results shows that the economy, energy, the war in Iraq, health care and taxes are among Americans’ top voting issues.

Foreclosures also remain a concern among many Americans. Over one-quarter of respondents expressed concern that their home or the home of a family member may be foreclosed upon because of their inability to make mortgage payments. Nearly half of respondents (46 percent) report that foreclosures are a problem in their area, up from 38 percent in 2007; and 42 percent say the rate of foreclosures has increased over the last year.

“Realtors® care as much about keeping families in their homes as they do about helping them find a place to call home,” said Gaylord. “NAR is aggressively working with government agencies, lenders and consumer groups on behalf America’s homeowners to help more families keep their homes.”

Nearly four out of 10 say the economy has taken a personal toll and report their personal financial situation has gotten worse over the course of the past year; the majority, 47 percent, feel their personal financial situation has stayed about the same. Despite these challenges, people remain optimistic that they could secure the credit they need; eight out of 10 are confident in their ability to refinance should they have the need. Only 8 percent of respondents say they are worried about being able to make their mortgage payments over the next year.

Of those with a mortgage, 26 percent have some type of variable-rate mortgage, including interest-only (19 percent), adjustable rate (7 percent) or balloon or other large payment due in the next 5 years (1 percent). Two years ago, the percentage of respondents holding a variable-rate mortgage was twice as high (56 percent).

The 2008 National Housing Pulse Survey is conducted by NAR’s Housing Opportunity Program. The telephone survey was among 1,000 adults living in the 25 most populous metropolitan statistical areas. The study has a margin of error of plus or minus 3.1 percentage points.

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