MMI Omnibus Survey. Homeownership. Top-Line Results and Suggested Story Lines

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1 MMI Omnibus Survey Homeownership Top-Line Results and Suggested Story Lines Methodology: Cynapsus and Money Management International (MMI) developed a series of questions on the topic of homeownership, which were included in a nationwide, Web-based, omnibus study. The survey questions focused on: Individuals assessment of whether a home is a good investment The most important factor to consider when considering a home purchase Feelings about renting in comparison to buying Alternative uses for the down payment money if they decided no to buy a home Actions they would take if they couldn t pay their mortgage or rent Whether they think that owning a home is still the American Dream The questions were finalized on Wednesday, May 18, 2011, and the omnibus was fielded for four days from May 20 through 23. Results were available May 25, The company conducting the omnibus, Russell Research, also provided detailed demographic data on all respondents. We planned for a total of 1,000 responses, and exceeded that goal with 1,027 completed surveys. 51% of the respondents were women, 49% men (mirrors the 2010 U.S. Census data). Their average age was 45 (2010 U.S. Census data show the U.S. median age as 37.2). Most came from the South (36% vs. 23% Midwest, 19% Northeast, 22% West). 46% are married, 53% are not married: Not married includes single-never married, divorced, separated, widowed, or living with someone This is lower than the 2010 U.S. Census finding of 48% married and is a further decline from the Census data, showing 50% married And, it shows a downward trend, from 57% in 2006, and 50% in In 1950, this number was 77%. 53% work either full or part-time (56% men, 50% women), and 20% are retired. This is up significantly from 44% in a December 2010 survey, where 49% of men said they worked, but represents a large increase for women, of whom 39% said they worked in December % of the women are homemakers. 13% are unemployed. This is down significantly from the 18% reporting this in December 2010, especially among women, where this number dropped from 17% in December 2010 to 10%. June 2011 Page 1 of 8 Cynapsus LLC

2 Reflecting this, reported household income rose from $48,100 in December 2010 to $51,800. To compensate for skews, the raw results were weighted using the demographic findings so the total results are representative of the U.S. population as a whole. Weighted results are reported here. Findings - Demographics Current Housing Status The proportion of renter to owners is higher now than it was in December 2010 increasing from 34% to 38%, and is especially notable for those who are renting apartments up from 19% to 24%. This reflects a nationwide trend towards renting vs. owning. The Harvard Joint Center for Housing Studies reports that the number of homeowners nationwide dropped significantly from 2007 to 2010, while the proportion of renters increased. And, they project that rental demand will increase as a result of proportionately more Baby Boomers in the population. Compared to renters, the highest percentage of homeowners is among: Married couples Those years old Those with incomes of $50,000 or more annually Respondents with children Caucasians and Hispanics Individuals who declared their political affiliation as Republican Findings Home Ownership Attitudes Owning a Home is a Good Investment Despite the housing bubble, the fact that many people were or are underwater on their mortgages, and owning/renting trends toward more rentals, 69% of respondents believe that owning a home is still a good investment. Not surprisingly, significantly more homeowners (76%) agree than renters (37%). There are some other demographic differences, with significantly more agreeing among: Those with college degrees (72%) People with larger households (73%) Respondents with children (75%) Those who are employed (72%) June 2011 Page 2 of 8 Cynapsus LLC

3 Fannie Mae surveys attitudes on home ownership regularly. In their current study, 57% said they believe that buying a home is a safe investment. But, their sampling includes some respondents who are underwater on their mortgages as well as an oversampling of low-income individuals. This figure has been declining from 83% in 2003 before the bubble burst and from 66% in the first quarter of Income is Key When Buying a Home A majority of respondents cited the most important factor to consider when purchasing a home is having enough income to support the monthly payment comfortably by 59%. We asked respondents to tell us which one of five possible reasons was the most important in a decision to buy a home. The second most-cited reasons were good credit and having sufficient savings in case of an emergency. An income that supports the monthly payment comfortably 59 Good credit Having sufficient savings in case of an emergency Being able to easily afford the down payment 7 We allowed an other response to this question. Only 23 people responded (2% of the total base), and of those, 14 (60%) said all of the above or something similar. Demographically, there were few differences in responses and those were expected (significantly more higher-income, college-educated respondents cited income). Most People Would Buy Rather than Rent Reflecting attitudes toward home ownership as a good investment, home ownership is still fundamental to the American psyche, with 66% saying that they would buy if they were in a position to change residences now. The only significant demographic differences were among those who currently own (82%) compared to those who rent (where 54% said they d rent). Much of this may be driven by the non-financial aspects of home ownership things like safety, access to healthcare, a good educational system, overall quality of life, providing a safe and healthy environment for children, and a sense of community. These findings are in agreement with those from a National Realtors Association survey conducted in October 2010 and a December 2010 Fannie Mae survey. June 2011 Page 3 of 8 Cynapsus LLC

4 Debt is Still an Issue Many Americans are still concerned about debt. More respondents said they d pay down debt if they had a down payment for a home but decided not to purchase than any other option of what to do with the money. Pay down debt 40 Use it as an emergency fund or add to an existing fund 29 Invest it in something else 21 Take a nice vacation or make a large purchase 10 This cuts across most demographics, with the exception of political affiliation, where significantly more Independents (51%) than Republicans (40%) or Democrats (35%) said they d pay down their debt. And, interestingly, even though the numbers are small, significantly more people in the Northeast (15%) and South (14%) would use the money to take a nice vacation or make a large purchase than those in the Midwest (6%) or West (4%) the areas hit hardest by the recession and the housing bust. Lenders and Financial Pros are a First Choice for Advice People would turn first to lenders or other financial professionals if they could not pay their mortgage or rent. Talk to a lender or other financial professional 35 Get another job 32 Borrow from family or friends Talk to a debt counseling service provider Find a way to get out of the house or apartment Demographically, significantly more people over 55 would seek help from a lender or other financial professional (47%), while those under 35 would get another job (41%). And, more June 2011 Page 4 of 8 Cynapsus LLC

5 homeowners (40%) would seek this help, compared to more renters who would borrow from family or friends (17%). Owning a Home is Still the American Dream Despite all the recent problems in the housing and mortgage industries, an overwhelming 81% believe that owning a home is still the American Dream. This appeal seems to be universal, with the only demographic differences being that significantly more Republicans (88%) agree compared to Democrats (78%) or Independents (81%), and homeowners (84%) vs. renters (77%). Although the question was phrased differently, in an October 2010 survey by the National Association of Realtors, 70% of homeowners and 48% of renters believe that owning a home helps them realize the American Dream. We asked those people who do not think owning a home is still the American Dream why they didn t. Although we got a wide variety of answers, there were several common themes: Too expensive (58 comments 30%) More to the American dream than owning a house (43 comments 22%) Comments related to the economy (34 comments 17%) Negative comments about banks, mortgage companies (21 comments 11%) Owning a house is too much trouble/work (14 comments 7%) Some of the comments include: You need to be able to afford and be responsible for a home. It s not a right. Some people don t want to worry about maintaining a yard and everything else that comes along with home ownership. I would rather rent an apartment or condo where landscaping and building maintenance is included in the rent. It isn t something I want to worry about since I lead an active lifestyle and don t have time for those kinds of things. It s a leftover idea from another time. A person can possibly live a much more comfortable, stress-free lifestyle by renting. Debt experts are saying it s overrated and that is the easiest way to get into uncontrolled debt. Because there is much more to the American Dream than just owning a home. Like your health, your family s well being and other things are of equal or greater importance. Suggested Story Lines Current Housing Status Results from a recent MMI survey confirm that renting is becoming more common than it was in the past. MMI survey results confirm those from a Harvard Joint Center for Housing Studies that more people are renting now than they had in the past. The profile of a typical homeowner is a married couple with children, aged 35-54, with incomes from $50,000 to $175,000. June 2011 Page 5 of 8 Cynapsus LLC

6 More Republicans are homeowners than Democrats or Independents. Homeownership Survey A Home as an Investment Seven in 10 Americans believe owning a home is a good investment. Three-quarters of homeowners think owning a home is a good investment. Only one-third of renters consider a home a good investment. If you have a big household, you probably think buying a home is a good investment. Seventy-three percent of those with three or more people in their household feel this way. College graduates are more likely to consider a home as a good investment than those who don t have a college degree. Most Important Factor to Consider when Buying a Home Six in 10 respondents to a recent MMI survey feel that having enough income to support the monthly payment comfortably is the most important factor to consider when buying a home. Despite the negative consequences of not requiring a significant down payment when buying a home, fewer than one in 10 respondents to a recent MMI survey feel that being able to easily afford the down payment is the most important factor to consider when buying. Have we become a society that only thinks of the monthly payment when we decide what we can afford? In a recent nationwide survey conducted by MMI, fewer than one in 10 respondents feel that being able to easily afford the down payment is the most important factor to consider when buying. Fewer than one in five respondents to a recent MMI survey feel that a good credit rating is the most important factor to consider when buying a home. In their decision to buy a home, only 15% of respondents to a recent MMI survey feel that having sufficient savings in case of an emergency is the most important factor to consider when buying a home. Buy vs. Rent Homeownership is fundamental to the American psyche. Two-thirds of Americans would buy if given a choice now between buying or renting. Homeowners are committed to their homes. Eight in 10 would buy again if they had to make a choice now between renting or buying. Renters are not as committed to renting. Almost half of them said they d prefer to buy a home if they were given a choice now. MMI survey respondents agree with those in a recent National Association of Realtors survey most would buy a home rather than rent if they could choose now. What to do with a Down Payment for a Home if No Purchase is Made Many lessons of the recession appear to have been learned. Other than the top choice of how they d use down payment money if they didn t buy a home, respondents to a recent MMI survey said they d use it as an emergency fund or add it to an existing fund, followed by invest it in something else. June 2011 Page 6 of 8 Cynapsus LLC

7 Only one in 10 people would use down payment money if they didn t buy a home to take a nice vacation or make a large purchase. Independent voters seem to be more fiscally conservative than Republicans or Democrats. In a recent survey by MMI, paying down debt was cited by significantly more Independents. In a recent survey by MMI, significantly more people in the Northeast and South said they d use money set aside for down payment money if they didn t buy a home on a vacation or a large purchase compared to respondents in the hardest hit areas of the West and Midwest. Where People Would Turn if They Couldn t Pay Their Mortgage or Rent Americans cited a number of ways they d cope if they couldn t pay their mortgage or rent. In a recent MMI survey, about one-third would turn to lenders and financial professionals. And, many more Americans over 55 would take this action. Even in a slow hiring economy, Americans are not afraid to try to get a second job. Besides turning to lenders or financial professionals, respondents to a recent MMI survey said they d get another job if they couldn t pay their mortgage or rent. Many respondents younger than 35 chose this alternative. Only one in 10 respondents in a recent MMI survey said they d find a way to get out of the house or apartment if they couldn t pay their mortgage or rent. Even though debt counseling services are free or very low cost, only one in 10 people would turn there for help if they couldn t pay their mortgage or rent. Only one in 10 respondents in a recent MMI survey said they d borrow from family or friends if they couldn t pay their mortgage or rent. But, nearly twice as many renters as homeowners would take this action. The American Dream In a recent MMI survey, eight in 10 Americans think that owning a home is still the American Dream. Nine in 10 Republicans still think owning a home is the American Dream. Significantly more Republicans than Democrats or Independents (eight in 10) responded this way in a recent MMI survey. In a recent MMI survey, most people who don t think owning a home is still the American Dream said homes are too expensive or that there s more to the American Dream than owning a home. Survey Questions 1. Is buying a home today considered a good investment? a. Yes b. No 2. Which one of the following do you think is most important when considering a home purchase? [Choose only one.] (Rotate.) a. Good credit b. An income that supports the monthly payment comfortably June 2011 Page 7 of 8 Cynapsus LLC

8 c. Having sufficient savings in case of an emergency d. Being able to easily afford the down payment e. Other (Specify ) 3. If you were in a position to change residences right now, would you rent or buy? a. Rent b. Buy (Skip to Q.5.) 4. If you decided no to buy a home, but had enough money for the down payment, what else would you do with that money? [Choose only one.] (Rotate.) a. Use it as an emergency fund or add to an existing fund b. Pay down debt c. Invest it in something else (stocks, CDs, savings, etc.) d. Take a nice vacation or make a large purchase 5. If you couldn t pay your mortgage or rent, what would be your first step? [Choose only one.] (Rotate.) a. Talk to a lender or other financial professional b. Talk to a debt counseling service provider c. Find a way to get out of the house or apartment d. Get another job e. Borrow from family or friends 6. Do you think that owning a home is still the American dream? a. Yes (Skip to end.) b. No 7. Why not? (Open end) June 2011 Page 8 of 8 Cynapsus LLC