Builders: Voters United on Value of Homeownership

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By Steve Seawright

Even though the housing market is still suffering from the effects of the worst housing market downturn since the Great Depression and many owners have seen the monetary value of their home decline, Americans still emphatically believe in homeownership.

That’s the key finding of a recent nationwide survey of people likely to vote conducted on behalf of the National Association of Home Builders (NAHB) by the Republican and Democratic polling firms of Public Opinion Strategies and Lake Research Partners. And, that same finding subsequently was corroborated independently by a New York Times survey.

Three out of four voters say that owning a home is worth the fluctuations in the market and the best long-term investment they can make, while 73 percent of those who do not own a home say it is their goal eventually to buy one.

Further, 80 percent of current home owners would advise a close friend or family member just starting out to buy a home. This is true even among those who are underwater on their mortgages.

Those are solid votes of confidence in an ideal that has suffered disproportionately due to the recession. Yet, like many other industries, housing is cyclical. With the worst of the downturn behind us, NAHB is forecasting that national home prices will remain flat this year and show modest growth in 2012.

To argue that home values will continue to decline and never recover somebody has to make a convincing case that it will cost less to build a new home five years from now than it does today. That’s not going to happen. Despite today’s housing slowdown, the price of bricks, mortar, lumber, copper and other products used in home building continues to go up due to worldwide demand and upward pressure on commodity prices generally.

One byproduct of the current housing slowdown is that new home production has fallen drastically. As of May 2011, U.S. single-family housing starts were running at an annual level of 419,000 units, well below the long-run trend of 1.5 million new single-family homes that are necessary to accommodate population growth and replacement of older housing stock.

As inventories wind down, demand will rise and so will prices. Add to the preceding considerations the entirely predictable effect on interest rates of sovereign deficits around the globe and the conclusion is that the cost today for owning that next home is unlikely ever to be lower.

As we turn the corner on the housing downturn, the longer term housing outlook is promising.
Based purely on population growth and demographics, the U.S. will need 17 million additional homes over the next decade.

Naysayers who are looking at the demise of housing, need only to study the results of either the NAHB poll or the New York Times survey. An overwhelming 95 percent of home owners say they are happy with having decided to own a home and Americans believe that homeownership is the single best investment for middle class families and helps provide for their retirement and their children’s education.

Further, nearly three out of four voters believe that the federal government should provide tax incentives to promote homeownership, a sentiment that cuts across partisan and regional lines across the country. In addition, a substantial majority of voters oppose eliminating the mortgage interest deduction and would be less likely to support a candidate for Congress who wants to do away with it.

The bottom line: American voters may be divided by partisanship and political ideology on a number of issues, but there is a strong bipartisan consensus that owning a home is still very much a part of the American Dream. As lawmaker’s debate housing finance and tax issues that affect every household across the land, they should remain cognizant of housing’s cyclical, but vital role in our nation’s economy and housing’s place in the values and priorities of the American electorate.

Steve Seawright is president of the Maryland State Builders Association.
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