Post-Recession Drivers of Preferences for Homeownership

Rachel Bogardus Drew, Chris Herbert

W12-4: The analysis presented in this paper tests for associations between views on homeownership and experiences with recent housing market distress. Using data from Fannie Mae‘s National Housing Survey collected in 2010 and 2011, this analysis finds little evidence to suggest that individuals‘ preferences for owning versus renting a home have been fundamentally altered by their exposure to house price declines and loan delinquency rates, or by knowing others in their neighborhood who have defaulted on their mortgages. The exceptions are underwater owners, who are less likely to expect that they will own in the future, and owners who know a strategic defaulter, who are less likely to view owning as financially preferable to renting. Instead, this analysis finds that individual characteristics, and in particular whether one is already an owner or renter, to be the strongest predictors of post-recession demand for homeownership.