Copyright © 2012 Fannie Mae Release Date: March 27, 2012 Fannie Mae National Housing Survey Quarterly Focus: The State of Homeownership Aspiration

2 Research Methodology (Q data)  From October 3, 2011 to December 20, 2011*, Penn Schoen Berland conducted 3,006 telephone interviews among the following audiences: Sample 1 (General Population)Sample SizeMargin of Error General Population (GP), including: 3, % Owner (own home outright) % Mortgage Borrowers (have a home mortgage), including: 1, % Underwater Borrowers (report owing at least 5% more on their mortgage than their home is worth) % Renter (rent home) % Minority Group Breaks (General Population Sample) Hispanic % African-American % Income Breaks (General Population Sample) Less than $25,000 annual income % $25,000 - $50,000 annual income % $50,000 - $100,000 annual income % More than $100,000 annual income % * Three monthly studies were completed during that time period and later the interviews were combined into one dataset. All three studies were identical in wording and placement of questions. Similar studies were conducted in December 2003, January 2010, June 2010, July-September 2010, October-December 2010, January-March 2011, April- June 2011, and July-September 2011and are used as a baseline periodically throughout this report. Note that on each question, respondents had the option to answer "don't know" (volunteered), which is why, in some cases, the total % may not equal 100. General population interviews were conducted by dialing both landline (75%) and cell-phone only households (25%) to ensure proper representation of cell-phone only households. The data presented in this study has been weighted to make it reflective of the U.S. Census demographic statistics in terms of gender, age, ethnicity, income, education, housing situation, and urbanicity.

3 Research Methodology (Full-Year 2011 data)  From January 4, 2011 to December 20, 2011*, Penn Schoen Berland conducted 12,014 telephone interviews among the following audiences: * Twelve monthly studies were completed during that time period and later the interviews were combined into one dataset. All twelve studies were identical in wording and placement of questions. Note that on each question, respondents had the option to answer "don't know" (volunteered), which is why, in some cases, the total % may not equal 100. General population interviews were conducted by dialing both landline (75%) and cell-phone only households (25%) to ensure proper representation of cell-phone only households. The data presented in this study has been weighted to make it reflective of the U.S. Census demographic statistics in terms of gender, age, ethnicity, income, education, housing situation, and urbanicity. Hispanic is defined by a question that asks if a person is of Hispanic origin or descent. Respondents are asked to identify their race in a separate question. Sample 1 (General Population)Sample SizeMargin of Error General Population (GP), including: 12, % GP <25K 2, % GP 25K-50K 2, % GP 50K-100K 3, % GP 100K+ 1, % Renters (rent home) 3, % Boarders (live with someone else, do not pay for housing) % African-American African-American, including: 1, % African American <25K % African American 25K-50K % African American 50K-100K % African American 100K % Hispanic Hispanic, including: 1, % Hispanic <25K % Hispanic 25K-50K % Hispanic 50K-100K % Hispanic 100K %

4 Headlines  Despite recent declines in home prices, Americans of all backgrounds continue to have strong aspirations to own a home –A majority of Americans across all demographic groups believe in the advantages of owning –Nearly two-thirds of current renters say that they will buy in the future –Non-financial factors are the top reasons given for buying a home across income groups –Hispanics and African-Americans see buying a home as a way to build up wealth and cite various benefits, such as homeownership as a symbol of success and civic benefits  However, attitudes about homeownership as an investment, financial constraints, and mortgage accessibility may mean that more Americans choose not to act on their aspiration for homeownership, thus potentially leading to lower homeownership rates –While a slight majority agree that homeownership has high investment potential, the percentage who feel it is a “safe” investment has declined over the past several years –Certain groups (renters, lower levels of education, lower income, African-Americans, and Hispanics) cite potential difficulties in getting a mortgage –Specifically, those renting today are most likely to cite poor credit, complexity of process, and bad economic times as major reasons not to buy a home –Hispanics and lower-income Americans are not confident that they are getting adequate information to select a loan

5 Despite recent declines in home prices, Americans of all backgrounds continue to have strong aspirations to own a home  A majority of Americans across all demographic groups believe in the advantages of owning  Nearly two-thirds of current renters say that they will buy in the future  Non-financial factors are the top reasons given for buying a home across income groups  Hispanics and African-Americans see buying a home as a way to build up wealth and cite various benefits, such as homeownership as a symbol of success and civic benefits

6 Most Americans believe owning their home is preferable to renting it, regardless of the recent housing crisis and falling home prices Source: Fannie Mae National Housing Survey Home Price Index Source: FHFA Purchase Only Home Price Index Which is closer to your view? Renting makes more sense because it protects you against house price declines and is actually a better deal than owning Owning makes more sense because you’re protected against rent increases and owning is a good investment over the long term Showing % “Owning makes more sense” versus Home Price Index The Fannie Mae National Housing Survey began collecting data in January 2010

7 Across all education levels, Americans say owning makes more sense than renting Which is closer to your view? Showing Q data Renting makes more sense because it protects you against house price declines and is actually a better deal than owning Owning makes more sense because you’re protected against rent increases and owning is a good investment over the long term Source: Fannie Mae National Housing Survey Q4 2011

8 The belief that owning makes more sense than renting also is consistent across income and minority groups Minority group Income group <25k25-50k50-100k100k+ GP African-American Hispanic Source: Fannie Mae National Housing Survey January December 2011 Which is closer to your view? Renting makes more sense because it protects you against house price declines and is actually a better deal than owning Owning makes more sense because you’re protected against rent increases and owning is a good investment over the long term Showing % Owning makes more sense, 2011 data

9 Nearly two-thirds of renters indicate that they will buy a house at some point in the future AMONG RENTERS ONLY: In the future, are you more likely to? Source: Fannie Mae National Housing Survey

10 Non-financial factors are the top reasons given for buying a home across income groups GP<25k25-50k50-100k100k+ It means having a good place to raise children and provide them with a good education You have a physical structure where you and your family feel safe It allows you to have more space for your family It gives you control over what you do with your living space, like renovations and updates Paying rent is not a good investment It allows you to live in a nicer home Owning a home is a good way to build up wealth that can be passed along to my family Buying a home provides a good financial opportunity Source: Fannie Mae National Housing Survey Q Is this a major reason, minor reason, or not a reason at all to buy a home? Showing % Major Reason, Q data Non-financial ReasonFinancial Reason

11 African-Americans and Hispanics are more likely to cite various benefits, such as retirement investment, homeownership as a symbol of success, and civic benefits as major reasons for buying a home GPAfrican-AmericanHispanic It allows you to live in a more convenient location that is closer to work, family, or friends It is a good retirement investment It allows you to select a community where people share your values Owning a home provides tax benefits Owning a home gives me something I can borrow against if I need it It's a symbol of your success or achievement It motivates you to become a better citizen and engage in important civic activities Source: Fannie Mae National Housing Survey January December 2011 Is this a major reason, minor reason, or not a reason at all to buy a home? Showing % Major Reason, 2011 data Non-financial ReasonFinancial Reason

12 However, attitudes about homeownership as an investment, financial constraints, and mortgage accessibility may mean that more Americans choose not to act on their aspiration for homeownership, thus potentially leading to lower homeownership rates  While a slight majority agree that homeownership has high investment potential, the percentage who feel it is a “safe” investment has declined over the past several years  Certain groups (renters, lower levels of education, lower income, African-Americans, and Hispanics) cite potential difficulties in getting a mortgage  Specifically, those renting today are most likely to cite poor credit, complexity of process, and bad economic times as major reasons not to buy a home  Hispanics and lower-income Americans are not confident that they are getting adequate information to select a loan

13 The margin of Americans believing homeownership has the highest investment potential has declined over the past several years Do you think this investment has…? Showing GP, % A lot of potential Source: Fannie Mae National Housing Survey

14 The perceived safety of homeownership as an investment also has trended downward, reaching a low in Q Do you think this investment is…? Showing GP, % Safe Source: Fannie Mae National Housing Survey

15 Do you think buying a home is a…? Safe investment with a lot of potential Safe investment with very little potential Risky investment with very little potential Risky investment with a lot of potential Showing % Safe Investment, Q data Higher educated and income groups are more likely to think buying a home is a safe investment Source: Fannie Mae National Housing Survey Q4 2011

16 Renters are consistently more likely than mortgage borrowers to think it would be difficult for them to get a home mortgage Do you think it would be very difficult, somewhat difficult, somewhat easy, or very easy for you to get a home mortgage today? Showing % Difficult Wave (% Easy/ Difficult) GP % Mortgage % Underwater % Owner % Renter % Q /5451/4745/5547/4726/72 Q /5454/4545/5454/4123/75 Q /5353/4641/5657/3727/71 Q /5552/4639/5952/4220/76 Q /5552/4739/6052/4525/71 Q /5750/4941/5647/4723/75 June '1042/5455/4443/5449/4425/73 January ’1035/6044/5438/5946/4619/78 Source: Fannie Mae National Housing Survey

17 African-Americans and Hispanics are more likely to indicate that getting a mortgage is difficult, regardless of income level Minority group Income group <25k25-50k50-100k100k+ GP African-American Hispanic Do you think it would be very difficult, somewhat difficult, somewhat easy, or very easy for you to get a home mortgage today? Showing % Difficult, 2011 data Source: Fannie Mae National Housing Survey January December 2011

18 WaveGP Less Than High School High School Some College College/Grad School MORTGAGE ACCESSABILITY TODAY Difficult / Easy Q /4276/2161/3659/3844/54 Q /4375/2165/3255/4340/59 Q /4576/2160/3653/4540/57 Q /4271/2561/3557/4044/54 Q /4373/2463/3556/4142/55 Q /4070/2364/3460/3642/55 June '1054/4267/2662/3453/4443/54 January '1060/3569/2566/3061/3551/45 Groups with lower levels of education are more likely to say it would be difficult for them to get a mortgage than groups with higher levels of education Do you think it would be very difficult, somewhat difficult, somewhat easy, or very easy for you to get a home mortgage today? Showing Difficult, Q data Source: Fannie Mae National Housing Survey Q4 2011

19 Renters cite financial reasons as the major factors for not buying a home GP You don't think you can afford the purchase or upkeep of a home 48 You don't have good enough credit for a mortgage 47 You don't think it's a good time economically to buy a home 45 It is cheaper per month to rent than to buy 35 You don't think you will be in a certain area for an extended period of time 33 Purchasing a home makes you feel like you will have limited flexibility in your future choices 28 You'd rather use the money for other investments than a home 28 The process of buying a home seems too complicated 26 You don't want to be concerned with doing the upkeep 24 You can live in a better neighborhood by renting 20 IF RENTER OR BOARDER: Is this a major reason you have not bought a house, minor reason, or not a reason at all Showing % Major reason, Q data Non-financial ReasonFinancial Reason Source: Fannie Mae National Housing Survey Q4 2011

20 Hispanic and African-American renters are most likely to cite bad economic times and overall complexity of process as major reasons not to buy a home GP (N=3,925) African-American (N=730) Hispanic (N=881) You don't think it's a good time economically to buy a home The process of buying a home seems too complicated IF RENTER OR BOARDER: Is this a major reason you have not bought a house, a minor reason, or not a reason at all? Showing % Major Reason, 2011 data Source: Fannie Mae National Housing Survey January December 2011

21 Lower income groups also are consistently more likely to cite income and credit history as obstacles to getting a mortgage Which of the following is or would be the biggest obstacle to you getting a home mortgage? Showing Q data Source: Fannie Mae National Housing Survey Q4 2011

22 Lower-income Americans are less confident they are getting adequate home loan information Source: Fannie Mae National Housing Survey - Fourth Quarter, 2011 If you were buying or refinancing your house today, how confident are you that you would get the information you need to choose the loan that is right for you? Showing GP % Confident Source: Fannie Mae National Housing Survey

23 If you were buying or refinancing your house today, how confident are you that you would get the information you need to choose the loan that is right for you? Showing % Confident/Not confident, 2011 data Hispanics are less confident than other groups about receiving information they need to choose the right mortgage Source: Fannie Mae National Housing Survey January December 2011