Real Estate Market

Love affair with homeownership on the rocks

by Broderick Perkins

(07/02/2010) Half of all homes are worth less than they were before the recession began. One in five homeowners has a mortgage that's greater than their home's value. And most homeowners think it'll be at least several years before values return to peak market levels.

Pew Research Center's exhaustive new report, "A Balance Sheet at 30 Months: How the Great Recession Has Changed Life in America," is pretty gloomy, but not all bad.

Despite declining home values and the long road to recovery, more than eight in ten Americans (82 percent) still see a home as the best long-term investment the average person can make.

That's more than the 70 percent of consumers who remain bullish on home buying as a safe investment reported by Fannie Mae earlier this year.

Released this week, Pew's report analyzes "economic outcomes, behavioral changes and attitudinal trends" related to the recession. It is based on a Pew Research Center survey of 2,967 adults conducted from May 11 to May 31, 2010, on cellular and landlines telephones and also on a Pew Research analysis of government economic and demographic data.

The report's "The Housing Bust" chapter is based on responses from 1,937 homeowners who say homeownership just ain't what it used to be.

The West was hit hardest. Nearly two-thirds of all homeowners in the West (65 percent) report the value of their home declined since the recession began in December 2007, compared to 48 percent nationwide.

Also nearly three-in-ten (28 percent) of homeowners in the West say they owe more than their home's current value, double the 14 percent of those in the East who say they are likewise suffering financially. Nationwide, 21 percent say they are "underwater."

On the positive side, a lucky 12 percent of all homeowners nationwide say their home value has increased since the onset of the recession, while one-third say the value of their home has not changed.

While 82 percent of Americans still see a home as the best long-term investment the average person can make, "some doubts have emerged in Americans' love affair with their homes," Pew reports.

The share that "strongly agrees" a home is the best investment has declined 10 percentage points from 49 percent to 39 percent since that question was asked by CBS News and the New York Times nearly 20 years ago.

The share that "somewhat agrees" with the statement has increased from 35 percent to 41 percent, while those who disagree increased from 13 percent to 17 percent.

Among homeowners surveyed, 47 percent predict it will take longer than the recession has lasted for their home to recover in value - three to five years.

Three-in-ten (29 percent) say it will take six to 10 years and another 10 percent say it will take longer than 10 years.

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