With the stock market hitting new highs and home prices marking their strongest gains since before the bubble burst, it’s starting to feel like a real economic recovery. But which is the better investment over time? That depends largely on your definition of “long term.” 

As the accompanying charts show, since the formal end of the recession, the stock market (as measured by the benchmark Standard & Poor’s 500 index) has recovered much more strongly than housing. As of Tuesday’s market close, the S&P 500 was up more than 74% (excluding dividends) since the beginning of 2009; although home values, as measured by the S&P/Case-Shiller index, were up 9.3% between February 2012 and February 2013 (the most recent data available), the index stands almost exactly where it did four years ago. (See this post for more discussion of the Case-Shiller index and how it’s calculated.)

Go back further — say, to the beginning of 2000  – and a different picture emerges. Stocks at the time were riding the crest of the dot-com wave, but when that wave crashed stock prices fell sharply and took years to recover. Housing, though, barely paused in its long upward march, peaking in 2006-07 (depending on the individual market) before plunging. Still, the Case-Shiller index stood 46.6% higher in February than it did in January 2000, while the S&P 500 was up just 4% over that same period (though subsequent gains to date have pushed the overall increase to 11.2%).

But unlike houses, many stocks pay dividends (especially in the large-capitalization S&P 500), which changes the return calculus yet again. Using a “total return” variant of the S&P 500 that takes dividends into account, the index is up nearly 43% since January 2000 — almost matching the gain in the Case-Shiller.

In short, much depends not just on which asset you buy but when you buy it. People who bought stocks in late 2008 or early 2009 have done very well; people who bought a year earlier, near the market’s peak, and held on have just recently broken even. And in all 20 metro areas that comprise the Case-Shiller index, home prices are still below their local peaks (which ranged between mid-2005 and mid-2007).

The differing performance histories for stocks and housing have real consequences. According to a recent Pew Research report, affluent households — defined as those with net worth of at least $500,000 — are far more likely to own stocks and other financial assets than less-affluent households. According to the survey, 62% of affluent households reported owning stocks and mutual-fund shares, versus 16 percent of the households below-$500,000. Nearly as many (61%) said they owned 401(k)-type retirement accounts, compared with 39% of the less-affluent households.

Due largely to that concentration of stock ownership, the affluent (who comprise about 7% of the nation’s households) have benefited more from the ongoing recovery than the lower 93%, much more of whose net worth is tied up in home equity.

It’s worth noting that a Gallup survey conducted in April and published today found that 52% of Americans say they own stocks directly or indirectly – the lowest level since they began asking the question in 1998, and down from 65% as recently as 2007. The ownership rate fell among all income groups, but the group that lost the most was the middle. Those with income between $30,000 to $74,999 declined 16% in 2013 compared to those surveyed in 2008.

Americans are an optimistic lot, especially when it comes to their homes. Just over two years ago, when the housing bubble’s collapse was fresher in people’s minds, eight out of 10 people surveyed for a Pew Research report agreed that buying a home was the best long-term investment a person can make.

But not everyone agrees. Robert Shiller, the Yale economics professor who co-developed the Case-Shiller index, said recently that most people would be better off putting their money into stocks than housing.

 Drew DeSilver is a senior writer at the Pew Research Center.

Tuesday’s report on the S&P/Case-Shiller home-price index showed a 9.3% increase between February 2012 and February 2013 — the biggest year-over-year increase in the 20-city composite index since before the housing bubble burst. Is housing, at long last, on the road to recovery?

Many Americans already think so. A Pew Research survey in March found that 52% of people said their local home prices had risen over the past year, up from 25% the last time we asked the question in June 2011. In the most recent poll, seven out of 10 people said they expected home prices in their area to rise over the coming year and only 20% expected them to fall, versus 54% and 37%, respectively, in 2011.

It takes a lot to dent Americans’ optimism about housing. Just over two years ago, when the housing bubble’s collapse was fresher in people’s minds, eight out of 10 people surveyed for a Pew Research report agreed that buying a home was the best long-term investment a person can make.

Public perceptions of the housing market don’t always jibe with market measures such as Case-Shiller, which uses data on repeat sales (i.e., properties that have sold at least twice) in 20 major metropolitan areas to assess changes in home values.

After peaking in July 2006, the Case-Shiller composite began to fall — modestly at first, then much more steeply starting in the summer of 2007. By April 2009, the index was nearly 33% off its peak.

But as late as July 2008, 54% of Americans told Pew Research they still expected their local home prices to go up — even though an almost identical percentage said local prices had fallen over the past year, and the Case-Shiller appeared to be in free-fall.

Though impressive, the big year-over-year gains in Tuesday’s report don’t necessarily signal a permanent housing recovery. The Case-Shiller composite has had several up-and-down cycles over the past four years, but has remained fairly range-bound: In fact, the index now stands almost exactly where it did in January 2009.

Drew DeSilver is a senior writer at the Pew Research Center.

]]> http://www.pewresearch.org/2013/05/01/public-optimism-on-housing-can-outrun-the-market/feed/ 0 http://www.pewresearch.org/2013/04/04/demographics-of-asian-americans/#utm_source=rss&utm_medium=rss&utm_campaign=demographics-of-asian-americans http://www.pewresearch.org/2013/04/04/demographics-of-asian-americans/#comments Thu, 04 Apr 2013 14:05:52 +0000 Pew Research Center http://www.pewresearch.org/?p=245529 http://www.pewresearch.org/2013/04/04/demographics-of-asian-americans/feed/ 0 http://www.pewresearch.org/2013/02/21/young-adults-shed-debt-after-recession/#utm_source=rss&utm_medium=rss&utm_campaign=young-adults-shed-debt-after-recession http://www.pewresearch.org/2013/02/21/young-adults-shed-debt-after-recession/#comments Thu, 21 Feb 2013 15:16:18 +0000 Pew Research Center http://www.pewresearch.org/?p=244344 http://www.pewresearch.org/2013/02/21/young-adults-shed-debt-after-recession/feed/ 0 http://www.pewresearch.org/2012/01/26/hispanics-say-they-have-the-worst-of-a-bad-economy/#utm_source=rss&utm_medium=rss&utm_campaign=hispanics-say-they-have-the-worst-of-a-bad-economy http://www.pewresearch.org/2012/01/26/hispanics-say-they-have-the-worst-of-a-bad-economy/#comments Thu, 26 Jan 2012 05:00:00 +0000 Pew Research Center http://www.pewresearch.org/2012/01/26/hispanics-say-they-have-the-worst-of-a-bad-economy/

A majority of Latinos believe that the economic downturn that began in 2007 has been harder on them than on any other group in America, according to a new national survey of Latino adults. Large shares report that they or someone in their household has been unemployed in the past year (59%); that their personal finances are in “only fair” or “poor” shape (75%); or that they are underwater on their mortgage (28% of Latino homeowners). However, Latinos are more upbeat than others about the prospect for better days ahead.

Read the full report for more results from the survey, including:

• Data on household wealth, unemployment and poverty rates for Latinos
• Comparisons between native-born Latinos and immigrants
• Latinos and upward mobility

 Related stories:

Wealth Gaps Rise to Record Highs Between Whites, Blacks, Hispanics

Childhood Poverty Among Hispanics Sets Record, Leads Nation

Hispanic Poverty Rate Highest In New Supplemental Census Measure

Overview

The five-year swoon in home prices has done little to shake the confidence of the American public in the investment value of homeownership. Fully eight-in-ten (81%) adults agree that buying a home is the best long-term investment a person can make, according a nationwide Pew Research Center survey of 2,142 adults conducted from March 15 to March 29, 2011.

There has been some falloff in the intensity of the public’s faith. Today, 37% “strongly agree” while 44% “somewhat agree” that homeownership is the best investment a person can make. When this same question was asked two decades ago in a CBS News/New York Times survey, 49% “strongly agreed” and 35% “somewhat agreed.”

Even so, confidence at any level these days is notable, given that the housing market is mired in the longest and deepest decline in modern American history. Home prices are down by 31% from their pre-recession peak in July 2006, according to the S&P/Case-Shiller Home Price Index.¹ After a pause last year, prices fell again in the first quarter of 2011.  

Homeowners are not blind to what has happened to home prices, nor are they expecting a speedy recovery. Among the 1,222 homeowners in the nationwide Pew Research Center telephone survey, about half (47%) say their home is worth less now than before the recession began, and 31% say its value has stayed the same. Just 17% say their home is worth more.

Of those who say their home has lost value, 86% say they expect it to take at least three years for values to recover to pre-recession levels; 42% say it will take at least six years; and 10% say it will take more than 10 years.

Still, fully 82% of homeowners who say their home is worth less now than before the recession began either strongly (37%) or somewhat (45%) agree that homeownership is the best long-term investment a person can make. Among homeowners whose home increased in value during the recession, this confidence is even more pronounced. Half (49%) strongly and 41% somewhat agree with this view.

Overall, homeowners are more positive than renters about the financial wisdom of owning a home; 41% of homeowners strongly agree that this is the best long-term investment a person can make, compared with just 31% of renters. (The survey sample included 57% of respondents who own a home and 30% who are renters; the remainder has other arrangements, such as living with family members.)

But renters are hardly immune to the allure of homeownership, even in the face of the five-year decline in prices. Asked if they rent out of choice or because they cannot afford to buy a home, just 24% say they rent out of choice. And when renters are asked if they would like to continue to rent or if they would prefer one day to buy a home, 81% say they would like to buy.

More evidence of the durability of Americans’ belief in homeownership comes from a question in which respondents are asked to assess the importance of four long-term financial goals. Homeownership and “being able to live comfortably in retirement” are rated the highest; each is seen as being extremely or very important by 80% of respondents. Nearly as many (73%) say the same about being able to pay for their children’s college education, and about half (53%) say the same about being able to leave an inheritance for their children. (These percentages do not include those who volunteered a “does not apply” response).

The Pew Research survey did find that nearly a quarter (23%) of all homeowners say that if they had it to do all over again, they would not buy their current home. But six-in-ten who express these pangs of “buyer’s remorse” cite complaints about the home itself (43%) or the location (17%). Just 31% cite financial factors. Of these, about half (16%) say their home has either lost value or failed to rise in value; others point to changes in the economy or their own financial circumstances.

The Bubble and its Aftereffects

The collapse in home prices since 2006 came on the heels of a 10-year period during which they more than doubled, rising by an unprecedented 137% from 1996 to 2006.² However, much of this run-up was a classic market “bubble,” fueled by excesses and fraud in the mortgage industry. When the bubble burst, financial markets melted down and the Great Recession (December 2007-June 2009) began.

During its dramatic ascent, the bubble generated big changes in consumer behavior. The home is the biggest asset for most Americans, and the run-up in home prices created what economists call a “wealth effect” that led to surges in consumer spending and borrowing that proved unsustainable. Once the bubble burst, those tendencies were curtailed.

Whatever other impacts it has had on the public and the economy, the bubble may partly explain the resilience of Americans’ faith in homeownership as an investment. Despite the sharp market declines of the past five years, the typical homeowner who has owned a home since 2002 or before still has seen its value rise. Not surprisingly, the Pew Research survey finds that the longer people have owned their home, the more likely they are to believe in the investment value of homeownership.

The big rise in home prices in the late 1990s and early 2000s may also explain this survey finding: Even with the five-year swoon in home prices, two-thirds of the public say that homeownership is not affordable to most young adults in their 20s and 30s. (This judgment may also reflect the public’s recognition of the high current levels of unemployment among young adults.)

Read the full report at pewsocialtrends.org.

<sub>1. Estimate based on the change in the quarterly, seasonally adjusted S&P/Case-Shiller national composite index of home prices.
2. S&P/Case-Shiller national composite index of home prices, first quarter 1996 to first quarter, 2006.</sub>

A majority of Americans say it is “unacceptable” for homeowners to stop making their mortgage payments and abandon their homes, according to a Pew Research Center survey. But more than a third (36%) say the practice of “walking away” from a home mortgage is acceptable, at least under certain circumstances.

Nearly six-in-ten (59%) believe it is wrong for homeowners to deliberately stop paying their mortgages and surrender their homes to the mortgage lender, according to the survey of 2,967 adults conducted May 11-31.

But two-in-ten (19%) say it’s acceptable and an additional 17% volunteer that it depends on the circumstances.¹

As the housing market continues to flounder in many parts of the country, more than one-in-five homeowners (21%) say they owe more on their mortgages than their home is worth, the survey finds.

Some homeowners in this situation stop making their mortgage payments and let the bank foreclose on their homes.

In July alone, lending institutions foreclosed on an estimated 93,000 properties, according to data compiled by RealtyTrac Inc.; this was the second-highest monthly total since the firm began tracking foreclosures in April 2005.

Not surprisingly, how people fared financially during the Great Recession is linked to their views on walking away from a mortgage.

Nearly half (48%) of all homeowners say the value of their home declined during the recession, and as a group they are more likely than those whose home did not lose value to say it’s acceptable to renege on a mortgage (20% vs. 14%).

Renters are even more likely to say it’s okay to stop making house payments: Fully a quarter (25%) say it is acceptable to walk away.

Those who have had financial problems during the recession are more likely than others to say that walking away from a mortgage is acceptable.

Nearly one-in-four adults (24%) who say their families are just able to pay their monthly bills or can’t meet expenses say it’s okay to stop paying a mortgage, compared with 14% of those who say they “live comfortably.”

But homeowners who say their homes are worth less than what they owe are not more tolerant of the practice than those who would break even or make money on a sale (18% vs.17%).

While some demographic groups are more likely than others to say it’s okay to walk away — among them, Hispanics, adults younger than age 65 and those living in the West — these differences are mostly modest.

For example, nearly a quarter (24%) of all Hispanics say it’s acceptable to abandon a mortgage, compared with 17% of whites and 21% of blacks. However, roughly similar majorities of Hispanics (58%), blacks (56%) and whites (61%) say it’s wrong to do so.

There are sharp differences by partisanship. Democrats are about twice as likely as Republicans to say it is acceptable to walk away (23% vs. 11%).

Under Water and Upside Down

As the housing market collapsed and the Great Recession took hold, sinking home values have left many homeowners owing more on their mortgages than they could collect if they sold their property. In real estate argot, their mortgages are “under water” and their home loans “upside down.”

According to the survey, about one-in-five mortgage-holders (21%) are currently “under water.” Black homeowners are more likely than whites to be in this circumstance (35% vs. 18%); lower-income homeowners are more likely than upper-income homeowners to face this problem (33% for those with family incomes of less than $30,000 vs. 15% for those earning $75,000 or more). Middle-aged homeowners are more likely than either younger or older homeowners to be in this situation.

Caught between big mortgages, sinking home values and the financial strains associated with periods of high unemployment, many homeowners have stopped making mortgage payments and opted to “walk away” from their loans and their homes. The practice has grown so common that the mortgage finance giant Fannie Mae, reeling from mounting losses, is now suing so-called “strategic defaulters” — those who can afford a mortgage but bail anyway.

Continue reading the full report at pewsocialtrends.org.

_{1. The question asked of respondents did not offer “depends on the circumstances” as an option. However, interviewers were instructed to accept this answer if respondents volunteered it. The fact that so many respondents volunteered this response suggests the proportion whose opinion of walking away lies somewhere between acceptance and outright rejection would have been even larger had it been offered as a choice. The question read: “As you may know, some people decide to stop repaying their home loan and ‘walk away from their mortgage,’ letting the bank or lending institution foreclose on their homes. Do you think it is acceptable or unacceptable for people to walk away from their mortgages?}

The boom-and-bust cycle in the U.S. housing market over the past decade and a half has generated greater gains and larger losses for minority groups than it has for whites, according to an analysis of housing, economic and demographic data by the Pew Hispanic Center, a project of the Pew Research Center. ¹

From 1995 through the middle of this decade, homeownership rates rose more rapidly among all minorities than among whites. But since the start of the housing bust in 2005, rates have fallen more steeply for two of the nation’s largest minority groups — blacks and native-born Latinos — than for the rest of the population.

Overall, the ups and downs in the housing market since 1995 have reduced the homeownership gap between whites and all racial and ethnic minority groups. However, a substantial gap persists. As of 2008, 74.9% of whites owned homes, compared with 59.1% of Asians, 48.9% of Hispanics and 47.5% of blacks.

At the same time, blacks and Latinos remain far more likely than whites to borrow in the subprime market where loans are usually higher-priced.² In 2007, 27.6% of home-purchase loans to Hispanics and 33.5% to blacks were higher-priced loans, compared with just 10.5% of home-purchase loans to whites that year. For black homeowners who had a higher-priced mortgage, the typical annual percentage rate (APR) was about 3 percentage points greater than the rate on a typical 30-year, fixed-rate conventional mortgage; for Latinos who had a higher-priced mortgage, the typical rate was about 2.5 percentage points higher than that of the conventional mortgage.

Moreover, in 2007, blacks and Hispanics borrowed higher amounts than did whites with similar incomes, exposing themselves to greater debt relative to their incomes. On both counts — the likelihood of higher-priced borrowing and higher debt relative to income — the gap between minorities and whites is greater among high-income households than among low-income households.

This study analyzes three major interrelated aspects of the U.S. housing market: trends in homeownership from 1995 through the middle of 2008 among different racial, ethnic and nativity groups;³ higher-priced lending to Hispanics and blacks in 2006 and 2007; and differences in foreclosure rates across the nation’s 3,141 counties.

One surprise to emerge from this analysis is that the recent decline in the homeownership rate has hit native-born heads of households harder than immigrant householders. Immigrant householders are less likely than native-born householders to be homeowners (52.9% versus 70.0% in 2008) but their losses in recent years have been smaller than those of the native born.

The explanation for the relatively modest impact of the recent housing market turmoil on immigrants appears to lie in the changing characteristics of the foreign born. Among other things, the typical immigrant in 2008 had spent more years in the United States and was more likely to be a U.S. citizen than was the typical immigrant in 1995. Those factors, strongly associated with higher rates of homeownership, appear to have mitigated recent troubles in the housing market among immigrants.

The analysis reveals that blacks and native-born Hispanics are among those who experienced the sharpest reversal in homeownership in recent years. Overall, the homeownership rate in the U.S. dropped from 69.0% in 2004 to 67.8% in 2008, a loss of 1.2 percentage points. Over the same period, the homeownership rate for black households decreased 1.9 percentage points, from 49.4% to 47.5%, reversing four years of gains. The homeownership rate for native-born Latinos peaked a year later in 2005. But since then it has fallen from 56.2% to 53.6%, a loss of 2.6 percentage points in just three years.⁴

Immigrant households did not experience similar losses in homeownership. For all immigrants, the homeownership rate declined modestly, from a high of 53.3% in 2006 to 52.9% in 2008. The rate for foreign-born Latinos has yet to diminish. It reached a peak of 44.7% in 2007 and was unchanged in 2008.

This report also focuses on differences in 2008 foreclosure rates across the nation’s 3,141 counties and the role of demography in explaining those differences.⁵ In 2008, the national foreclosure rate was 1.8%, triple the rate in 2006. But the foreclosure rate — or the percentage of housing units with at least one foreclosure filing — varies widely across counties. The analysis finds that counties with higher shares of immigrant residents had elevated rates of foreclosure. It is estimated that of two counties with similar economic and demographic characteristics, the one whose immigrant share of the population is 10 percentage points higher than the other has a foreclosure rate that is 0.6 percentage points higher.

But it cannot be inferred from this finding that immigration levels in and of themselves are the cause of elevated foreclosures. In recent years, the construction boom attracted immigrants in large numbers into new settlements in the U.S. Many of these areas, such as Nevada’s Clark County, which includes Las Vegas, are now experiencing sharp reversals in construction and a wave of foreclosures.⁶ Thus, the presence of immigrants in a county may simply signal the effects of a boom-and-bust cycle that has raised foreclosure rates for all residents in that county.

The state of the local economy is also an important determinant of foreclosures. A county’s unemployment rate that is 1 percentage point higher than in a typical county is associated with a foreclosure rate that is 0.1 percentage points higher. Home prices falling annually by about 2 percentage points more compared with a typical county are also estimated to raise foreclosure rates by 0.1 percentage points.⁷ Local housing costs, as reflected in high loan-to-income ratios, and a greater incidence of higher-priced lending to blacks and Hispanics are also linked to higher foreclosure rates.⁸

Data from a number of sources are used in this study. They include demographic and homeownership data from the Census Bureau’s American Community Survey (ACS) and Current Population Survey (CPS), foreclosure data from RealtyTrac®, loan data from the Home Mortgage Disclosure Act (HMDA), labor market data from the Bureau of Labor Statistics (BLS), and home prices from the Federal Housing Finance Agency (FHFA).

The major findings of the study are as follows:

Homeownership

• Homeownership in the U.S. expanded rapidly from 1994 to 2004 but has declined since then. Some 69.0% of all households owned homes in 2004 compared with 64.0% in 1994. The homeownership rate fell each year after 2004 and stood at 67.8% in 2008.
• Homeownership among Hispanics increased more quickly and for a longer time than homeownership overall. The Latino homeownership rate peaked at 49.8% in 2006, compared with 42.1% in 1995. It was unchanged in 2007 and fell to 48.9% in 2008.
• Black householders raised their homeownership rate from 41.9% in 1995 to 49.4% in 2004. By 2008, the black homeownership rate had decreased to 47.5%.
• Immigrant householders are less likely to be homeowners than those who are native-born, but their losses in recent years were relatively modest. Homeownership among immigrant householders increased from 46.5% in 1995 to 53.3% in 2006 and then fell to 52.9% in 2008.
• Among native-born householders generally, the homeownership rate increased from 66.1% in 1995 to 71.5% in 2004, peaking two years earlier than for immigrants. The native-born homeownership rate in 2008 was 70.0%.
• Foreign-born Latinos have not experienced a reversal in homeownership. Their homeownership rate increased from 36.9% in 1995 to 44.7% in 2007 and was unchanged through the first half of 2008.
• Native-born Hispanics raised their homeownership rate sharply, from 47.2% in 1995 to 56.2% in 2005. But they also experienced a sharp turnabout, as their homeownership rate dropped to 53.6% in 2008.

Loans for Home Purchase

• There was a precipitous drop in the number of loan applications for home purchases from 2006 to 2007. Nationwide, the number of applications decreased 25.2%, and there was an accompanying drop of 25.0% in the number of loans originated. Some of this decline is due to a lack of reporting by lenders that ceased operation in 2007, but the vast majority reflects a real drop in market activity.
• Loan applications for home purchases by Hispanics fell 38.2% from 2006 to 2007. Applications from blacks decreased 34.4% during the same period, and the number of white applicants decreased 18.9%.
• Among Hispanics, loan applications from the highest income group decreased at a faster rate (41.0%) from 2006 to 2007 than did applications from the lowest income group (23.8%).
• The median amount borrowed by Hispanic home buyers in 2007 was $197,000, somewhat higher than for blacks ($168,000) and whites ($180,000). When compared with others with similar incomes, blacks also borrow more than whites.
• Loan-to-income ratios are higher for Hispanic and black households than for whites. The gap between minorities and whites is greater among high-income households.
• Some 14.2% of overall home purchase loans in 2007 were higher-priced loans. But 27.6% of loans issued to Hispanics and 33.5% of loans issued to blacks in 2007 were higher-priced. Only 10.5% of loans to whites were higher-priced.
• High-income Hispanics and blacks are about as likely as low-income Hispanics and blacks to receive a higher-priced loan. That is not the case for high-income whites who are half as likely as low-income whites to receive a higher-priced loan.

Foreclosures

• The national foreclosure rate tripled from 2006 to 2008, increasing from 0.6% to 1.8%.
• The foreclosure rate was 5% or more in 33 of the nation’s 3,141 counties. Of those 33 counties, California was home to 12 and Florida to 10. Virginia and Nevada accounted for three counties each.
• The highest foreclosure rate in the nation was 12.0% in Florida’s Lee County, which includes Fort Myers and Cape Coral.
• The typical county in the U.S. had a foreclosure rate of 0.6% in 2008. That is the simple average of foreclosure rates across 3,141 counties.⁹ The foreclosure rate was less than 0.6% in 2,164 counties.
• The vast majority of counties in several states that are either traditional immigration destinations or notable new areas of settlement have foreclosure rates that are higher than in the typical county — 157 of 178. These counties are in California, Arizona, Nevada, Florida and New Jersey.
• Higher shares of immigrants in county populations are associated with higher foreclosure rates. But this does not mean that immigration in and of itself is the cause of elevated foreclosures.
• Higher foreclosure rates across counties are also associated with higher unemployment levels, home-price depreciation or slower appreciation, home prices that are high relative to income levels and higher proportions of higher-price mortgage loans to Hispanic and black homeowners.

Read the full report at pewhispanic.org.

<sub>1. All references to whites, blacks and Asians in this report are to the non-Hispanic components of those populations. The terms Latino and Hispanic are used interchangeably.
2. Activity in the subprime market is approximated in this report by higher-priced lending. Higher-priced loans have an annual percentage rate (APR) that exceeds the rate on U.S. Treasury securities of comparable maturity by a specified threshold (3 percentage points for first-lien loans). Higher-priced loans are believed to encompass the vast majority of subprime loans (see “Frequently Asked Question About the New HMDA Data“).
3. References to homeownership in 2008 for sub-national populations are based on trends through June 2008.
4. The national homeownership rate is as reported by the Census Bureau. Estimates of homeownership by race, ethnicity and nativity are the Center’s estimates derived from the Census Bureau’s Current Population Survey data.
5. This question is not directly answerable because foreclosure statistics by race, ethnicity or nativity are currently not available. However, the relationship between demography and foreclosure activity at the county level is discerned in this report through the marriage of different sources of data.
6. Census Bureau data show that permits for new privately owned housing units in the Las Vegas-Paradise metropolitan area fell from 39,237 in 2005 to 12,538 in 2008, a drop of 68%. That was greater than the nationwide drop of 58% in permits. (http://www.census.gov/const/www/C40/table3.html)
7. Home prices rising slower by about 2 percentage points on an annual basis have a similar effect on foreclosure rates.
8. Data on higher-priced loans to immigrants are not available.
9. The national foreclosure rate of 1.8% is the ratio of all foreclosure filings in the U.S. to all housing units in the U.S. It is essentially a weighted average of foreclosure rates in counties where the weights are the number of housing units in a county. The weighted average (1.8%) is higher than the simple average (0.6%) in this case because the foreclosure rate is higher in more populated areas.</sub>

Not even a housing-led recession can shake Americans’ faith in the blessings of homeownership.

House prices may be falling, foreclosures rising and residential sales weak — yet the vast majority of homeowners say their home is a source of comfort (90%) in their life, while just 6% say it is a burden, according to a Pew Research Center Social & Demographic Trends survey conducted Oct. 3-19, 2008 among a nationally representative sample of 2,260 adults, including 1,625 homeowners. Another 4% say their home is both a comfort and a burden.

This warm feeling of owners for their homes contrasts sharply with the nation’s chilly residential real estate market. By the end of last year, Zillow.com, an online real estate information source, calculated that U.S. home values had fallen 17.5% since the market peak in 2006 — or by a total of $6.1 trillion.

Homeowners aren’t unmindful of this tanking market. Eight-in-ten (82%) in the Pew Research Center survey say that now is a bad time to sell a home in their area. More than seven-in-ten (73%) say that this is a good time to buy a home.

Despite the current national housing funk — or maybe as a refuge from it — owners in all the major demographic groups overwhelmingly say they view their home as a comfort. There are no differences by gender, race, age, income or education. Nor do people’s responses vary depending on whether or not they are married, have children or are employed. Owners who have never left their hometowns and those who have moved repeatedly are just as likely to say their homes are a comfort.

Responses vary somewhat, however, by region of residence. Midwestern homeowners (14%) are slightly more likely than those in the East or South (6% each) to say their home is at least partly a burden. Among Western homeowners, 11% say so.

There are larger differences in personal attitudes between comforted owners and those who view their homes as partially or entirely a burden. Burdened owners are less happy with themselves and their communities.

More than a third of burdened homeowners (36%) say they are not too happy, compared with 12% of comforted ones. (Overall, homeowners are happier than those who don’t own a home, but that difference appears to be largely explained by the fact that homeowners are more likely than renters to be married and to have high incomes — and both of these characteristics correlate with increased happiness.)

Only 44% of burdened homeowners rate their community as good to excellent, compared with 69% of comforted homeowners. Asked to rate particular aspects of their communities, most burdened owners give fair or poor marks to the local cost of living and to cultural activities, whereas most comforted owners rate those as good to excellent.

Burdened owners are also more likely to be planning to sell soon. Nearly half (45%) say they are likely to move in the next five years, compared with 30% of comforted owners. However, they also think they will have a harder time doing so. Nine-in-ten owners who view their home as entirely or partially a burden (92%) say it is a bad time to sell a house in their area, compared with eight-in-ten owners (81%) who view their home as a comfort.

Americans across all major demographic groups agree that is a bad time to sell a home but a good time to buy one. Nearly eight-in-ten (79%) of all respondents (renters and owners) say it is a bad time to sell a home in their area. Two-thirds (65%) say it is a good time to buy a home.

There are only a few sub-groups where the share believing it’s a seller’s market approaches one in five. These groups include Americans ages 18-29 (18%), black Americans (18%) and people with household incomes of less than $30,000 a year (20%) — all groups with below-average homeownership rates.

Suburban residents (83%) are somewhat more likely than those who live in cities (77%) or small towns (78%) to say it’s a bad time to sell. Among rural residents, 79% say it’s a bad market for sellers. People who moved to their current homes a decade or more ago (82%) are somewhat more likely than more recent arrivals (75%) to say it is a bad time to sell a home.

Among the regions, residents of the South (18%) are more likely to say it’s a good time to sell than are residents of the East (11%), Midwest (12%) or West (10%). But residents of the South (61%) and East (60%) are less likely to say it’s a good time to buy than are people who live in the Midwest (72%) and West (70%).

Almost everyone agrees that it’s a good time to buy a house: men (70%) somewhat more than women (61%), and whites (69%) somewhat more than blacks (51%) or Hispanics (58%). Americans with higher levels of income and education are more likely to say it’s a buyer’s market in their area.