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Homeownership still part of the ‘American dream’

Posted: September 23, 2011 1:55 a.m.
Updated: September 23, 2011 1:55 a.m.

Potential homebuyers report being interested in smaller-size homes today. A Westridge Valencia home sold by Realty Executives Valencia is pictured.

 

Seventy percent of Americans still said homeownership is part of the “American dream,” according to Trulia, the online residential real estate search engine.

“I fully expect that the demand for owning a home, and obtaining that part of the American dream, won’t be going away anytime soon,” said Robert Mickalson with Realty Executives Valencia.

Realtors have seen similar numbers when they compare our clients, said Connor MacIvor with RE/MAX Realtors in Santa Clarita.

“We are finding that even those that have experienced the short sale or foreclosure personally just want to get into another home soon.”  

The biennial American Dream survey has tracked American attitudes toward homeownership since 2008. Harris Interactive conducted the online survey on Trulia’s behalf.

Despite record-low home sales nationwide, sales in the Santa Clarita Valley rose sharply in August.

Best investment
And the Trulia survey revealed 57 percent of current homeowners said owning a home is among the best long-term investments they could make. Fifty-two percent ranked putting money in a 401K or retirement account as the second best investment.

Of current homeowners, 80 percent said they plan to buy another home in the future.

“Real estate is about moving up,” MacIvor said. “If a person wishes to increase wealth, they use past-purchased real estate as leverage.”

Meanwhile, the age group that has the lowest homeownership rates, 18- to 24-year-olds, the majority surveyed also said owning a home is important to them.

Hurdles
Saving enough for a down payment was cited as a barrier 51 percent of the respondents in this age range.

Local realty experts all said buyers can get into the real estate market, however, with FHA loans that only require a 3.5-percent down payment.

“For most buyers, where there is a will, there is a way, if the agent and/or lender is diligent and well-educated enough,” said Richard Szerman of Silver Creek Realty in Santa Clarita.

While it’s true that a sizable down payment and/or being able to pay for buyers’ closing costs is a hurdle to achieving home-ownership for many, there are grant programs available from time to time to help offset that fact, Mickalson said.

And closing costs can usually be negotiated as something the seller will pay for the buyer, MacIvor said. 

“With the low prices and the extreme low interest rates,” said Diane Kauzlarich of Triple D Realty in Santa Clarita. “You can’t rent an apartment for what you can buy a starter home for.”

Often times, rent is more expensive than owning a home, when considering the tax advantages, Mickalson said.

Other concerns of home buyers are qualifying for a mortgage or having a weak credit history.

“We always advise our clients not to purchase any “large ticket” items during the escrow time frame,” MacIvor said. “That includes bedroom sets on credit.”

Downsizing
Reflecting the change in consumer spending habits, the survey revealed that home buyers have become more practical.

Only 6 percent said their ideal home size is more than 3,200 square feet, a decrease from 2010 and a shift in consumer mentality compares to the real estate bubble period, when house sizes and prices only increased.

“We’re definitely seeing more practical attitudes from home buyers, especially first-time home buyers,” Mickalson said.
“They don’t necessarily want to purchase what their lender says they can afford. They want to minimize the impact of a mortgage to their overall budget,” he said.

Despite wanting to be cautious, purchasing a home is still very important to our clients, said Mickalson.

“We can tell that they simply don’t want to rent any longer, and they see the value in owning their own home, especially with such low interest rates.”

Homes 1,401 to 2,000 square feet are desired by 32 percent of the survey responders.

“Everyone these days is downsizing, even in their aspirations,” Szerman said. “America is becoming a nation of people who aim low.”

“We should all be very concerned what downsizing our dreams and aspirations will eventually yield us as a people,” he said.

SCV heating up
“Despite the slow and weak economic recovery, and stumbling housing market, the American dream of homeownership is alive and well,” said Jed Kolko, Trulia’s chief economist.

So long as interest rates are favorable, and prices remain at these low levels, or even reduce by some additional percentage, we will continue to see interest from home buyers, Mickalson said.

Given the strong intent to buy a home among today’s renters and homeowners, I am optimistic that long-term housing demand will recover, Kolko said.

The Santa Clarita real estate market will experience modest recovery this coming 2012, said Sal Aranda, president of the Southland Regional Association of Realtors Santa Clarita Division.

Single-family home sales rose 19.4 percent in August from a year ago, SRAR reported last week. The 222 homes that changed hands made August the best recorded sales month since July 2009, and represented the third consecutive monthly gain.

“We are experiencing a positive impact of key elements within the housing market, such as low mortgage rates, high housing affordability and favorable home prices,” Aranda said.

These factors favor buyers when shopping for a home to buy. Mortgage rates remain at historic lows.

“Frankly, I am surprised that 30 percent of people didn’t see homeownership as even part of the American dream,” Szerman said.

jadkins@the-signal.com

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