Five years after the end of the recession, the American Dream remains as strong as ever. It’s achieving it that has become more difficult.
For all the suffering caused by the collapse of the housing market, the vast majority of Americans still want to own a home, according to a recent survey. And they still think it’s a good financial investment, despite the tidal wave of foreclosures that hit the market during the Great Recession.
But it’s more difficult for many people, from the first-time buyer to the family that wants more space, to get the house they’re dreaming of.
“We feel very confident that aspirationally, people want to own homes,” said Steve Deggendorf, director of strategic research for Fannie Mae, the government-backed mortgage giant that studies attitudes toward housing. “It seems like there’s a fundamental, underlying desire to own, but the economy makes it harder.”
If the economy makes it too hard, it will be shooting itself in the foot. A more robust housing market is critical, economists say, to how quickly and strongly metro Atlanta’s economy rebounds.
The obstacles to buying run the gamut, from the limited number of homes for sale for well over a year to the difficulty convincing a bank to make a loan. Also, some younger potential buyers have an aversion to taking on debt. And despite consistent double-digit gains, prices still haven’t risen enough for many existing owners to sell their homes and afford new ones. Some homeowners, frustrated with the market, have decided to renovate what they have.
Meanwhile, investor groups are buying many of the cheaper homes that first-time buyers desire, beating them to the closing table with all-cash offers. And while homebuilding is picking up, the houses being built are largely at the more profitable higher end of the market, instead of for first-time buyers.
All told, the changes to the market have made buying a house in metro Atlanta a contact sport.
Take Michelle Bard, for example. She decided she wanted to be in a new house, in a new school district, before her youngest daughter started Kindergarten. She put her Roswell house on the market the first Monday in April, and within a week, the family’s home of 12 years had been snapped up.
When school let out, the family moved in with Bard’s parents in McDonough, while her husband commuted to a job in Brookhaven — a drive that can take as long as two hours. Throughout the summer, they missed out on three houses in the Alpharetta area with bids that were too low or too late, given the limited supply available. In metro Atlanta, there is only a 4.2 month supply of homes on the market — two months less than the normal level.
Bard began to panic when it seemed like she might not get a house in time for school.
“It’s very stressful and very depressing,” she said before winning her new home a couple of weeks later. “‘I didn’t realize how hard it was going to be.”
On a Sunday morning, Bard learned the four-bedroom Alpharetta home she’d end up buying was on the market. She saw the house at 12:45 p.m. and made an offer the same day. Bard closes at the end of July, and will move in just in time for the first day of school on Aug. 11. The house doesn’t have the basement her husband wanted, but otherwise suits their needs.
“It was the first one to feel right in a long time,” she said. “This is not the year to wait around.”
The recession has forced people to stay in their homes longer, from an average of six years in a house from 2001 to 2008 to nine years in 2013. Tenure will increase in the future. First-time buyers now intend to be in their homes for a decade, while repeat buyers plan to spend 15 years, according to data from the National Association of Realtors.
Jessica Lautz, the organization’s director of member and consumer survey research, said many people are now able to buy more home for their money. Some also have refinanced with lower interest rates, so they have an incentive to stay put.
Brian Benson thought about putting his home on the market, but abandoned the idea when he looked and couldn’t find another. Benson bought his four-bedroom Sandy Springs house with roommates in 1999. Fifteen years later, he is married with two kids, and still in the same home.
The 1950s house had its quirks, like the glass-brick fireplace in the basement and the annoying tendency for the water pressure to drop whenever a toilet was flushed. But Benson and his wife couldn’t find a better one when they got married, and he’s put plans to buy a lot and build on hold.
Instead, Benson put on a new roof, got a new air-conditioning unit and fixed the plumbing. He remodeled the kitchen and redid the basement. Now, he plans to repour the cracked driveway, put up new siding, fix up the front porch and master bath and add a new garage door.
“If we’re going to stay, and we’re resigned to, let’s make us happy while we’re there,” he said. “We’re not fixing it to sell.”
While many home shoppers are having trouble, even those who find a house are facing problems. New mortgage rules, created to try to prevent another financial crisis, “play havoc with those who are ready to buy a home,” said George Burgan, spokesman for the Atlanta Neighborhood Development Partnership. Citing CoreLogic data, Burgan said nearly 13 percent of the loans made in 2012 wouldn’t meet today’s standards.
“The economy is holding people back,” he said.
That means more people are renting longer, though they still want to buy down the road. John Putrich hopes to own a home someday, but for now, the 30-year-old Vinings resident prefers the flexibility of renting so he can more easily move for a job if he wants to.
Renters between the ages of 18 and 39 are likely to rent again — 49 percent at the end of 2013 said they would most likely rent were they to move, according to Fannie Mae. But 90 percent said they’d like to buy at some point.
Owning is “part of the American psyche,” said Svenja Gudell, Zillow’s director of economic research.
In 1992, 79 percent of all adults said people are better off owning than renting. At the start of 2014, 77 percent thought owning was better for lifestyle reasons and 84 percent for financial reasons. People think buying a home is a safer investment than the stock market, and they have since 2010, when Fannie Mae started the survey.
That’s despite a housing meltdown that has still left a third of the region’s homeowners underwater — owing more on their mortgages than their homes are worth. The crisis pushed nearly 240,000 metro Atlanta households into foreclosure since 2006.
But even delinquent borrowers are largely sold on the benefits of owning again. The same number as the general population — 67 percent — think buying a home is a safe investment. Fifty-two percent say they would buy rather than rent if they were going to move. And more than 70 percent say it’s better to own to build wealth, save for retirement or for general financial well-being.
“Attitudes are becoming more positive for owning a home, even for those people who have been through the worst,” said Deggendorf, with Fannie Mae. “People who rent a single-family home are pining for the owning experience.”
The economy, though, will dictate behavior, he said.
The recession could have made people more hesitant to buy a home, said Louise Keely, president of the nonprofit Demand Institute. In a way, she said, the fact that it didn’t is “incredible.”
But Keely questioned whether many potential buyers would have the resources they need to become homeowners. She expects the homeowner rate to stay steady at about 65 percent, down from 69 percent in 2004. Even as more people buy, the rate will be pulled down by new renters who are entering the market for the first time.
Putrich, the 30-year-old Vinings renter, is not ready to own. But he said he’s likely to buy once he gets married and feels more stable.
“I still think that’s the American Dream,” he said. “I think you don’t get that when you’re 25.”
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