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Fannie Mae Affordable Housing Survey
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The research firm of Penn, Schoen & Berland Associates conducted the 2003 Fannie Mae National Housing Survey.
The national representative sample was comprised of 715 adults, age 18 years of age or older. Three additional subsamples were also conducted of minorities including: 259 African-American adults, 236 Englishlanguage dominant Hispanic adults, and 235 Spanish-language dominant Hispanic adults. The interviews took place between December 17, 2003 and January 6, 2004. Interviews with English-language dominant Hispanics were conducted in English and interviews with Spanish-language dominant Hispanics were conducted in Spanish.
The margin of error is plus/minus 3.7 percent for the national sample, 6.2 percent for the African-American sample, and 6.5 percent for the Hispanic samples. The margin of error is higher for results drawn from smaller subgroups.
Fannie Mae’s 12th annual National Housing Survey offers telling insight into how Americans feel about homeownership, their ability to buy a home, and the
obstacles to increasing homeownership. The American Dream of homeownership has never been a more powerful lure, nor has it ever been so achievable. Despite the lingering effects of recession and a weak labor market, optimism over housing is strong. Two-thirds of those who responded to our 2003 survey agree that it is a good time to buy a home and 61 percent view homeownership as a safe investment with a lot of potential.
In almost every respect, 2003 was the greatest year for housing in America’s history. Housing sales were at all-time highs. Mortgage interest rates dropped to their lowest level since the late 1960s. Mortgage originations were up more than 40 percent from just the year before, coming in at a remarkable $3.7 trillion, as consumers bought homes or refinanced their existing mortgage. Fannie Mae also had one of our best years ever. Along with our lender partners, we delivered $1.4 trillion in financing to serve a record 10.4 million families.
Much more needs to be done, however, to deliver the American Dream. The results of this survey will help Fannie Mae achieve our expanded American Dream Commitment to underserved families, especially minority Americans. We are committed to creating six million new homeowners (including 1.8 million minority families) over the next ten years, helping families keep their homes, and expanding the supply of affordable homes where they are needed the most. By helping us to understand the persistent housing gaps, this survey will help guide the way.
Since 1992, Fannie Mae has used our annual National Housing Surveys as a tool to gain greater understanding of America’s emerging housing needs and to gauge the progress our company and our industry have made in removing barriers to homeownership. Our first survey found that potential home buyers did not have reliable information about the home-buying process. In response, Fannie Mae launched a groundbreaking consumer outreach effort. In 1996, the Fannie Mae Foundation took over these consumer outreach efforts, which have provided millions of renters with free guides and online information explaining what steps they must take to move into a home of their own.
Over the years, our surveys have identified an array of challenges that required concerted, focused responses. As we learned more about the hurdles that down payment and closing
costs represented, we developed new mortgage products and devised underwriting experiments that redefined creditworthiness. We’ve uncovered new ways to make the home-buying process less intimidating and more accessible. Past surveys have explored the public’s perception of subjects such as the health of our nation’s cities and its comfort level in using technology to get a home loan.
While each year’s survey takes a close look at a different issue or market segment, we have seen a universal theme year after year: Americans of all ages, incomes, and ethnic backgrounds believe deeply in homeownership and will go to great efforts, if necessary, to realize their American Dream of owning a home.
Our 2003 National Housing Survey offers a special look at America’s Spanish-language dominant Hispanic households and English-language dominant Hispanic households. It ref lects our industry’s progress in serving these critical emerging markets — and highlights the challenges still ahead. Let me summarize what I believe are the survey’s key insights:
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Despite the initiatives of recent years, there remains a sizable information gap between the general public and minority communities regarding homeownership and the home-buying process.
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Affordability gaps are also formidable for the group we have termed “seekers,” those who began the home-buying process, but did not take it to completion. This segment represents nearly 10 percent of all households, and over one-third of all renters.
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There is still a perceived credit gap, as many minority respondents believe they cannot access the credit needed to buy a home when, in fact, they may easily qualify for a lowcost loan.
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The survey found that there is a confidence gap that must be bridged if we are to increase minority homeownership rates. Many potential minority homeowners still believe the process of finding a home, applying for a mortgage and getting a home loan involves obstacles that place homeownership beyond their reach. Or they may feel they don’t have individuals or institutions they can turn to and trust to help them through the process.
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One of the key findings in this year’s report is that Spanishlanguage dominant Hispanic households are not as confident as other groups going into the home-buying process. Yet the survey also reveals that Spanish-language dominant Hispanic households maintain extremely high aspirations and are very optimistic about homeownership, despite having less accurate information about the home-buying process than other groups. That is particularly important considering that over the next two decades the Hispanic population – fueled largely by immigration – is expected to increase by 75 percent. English-language dominant Hispanics and African Americans have more accurate information than Spanish-language dominant Hispanics, but they still trail the general public in having accurate information about key areas of the mortgage process.
Fannie Mae and its many housing partners around the nation are determined to close America’s homeownership gaps. During the past ten years, Fannie Mae has worked with our partners to bring more than $3 trillion in housing capital to underserved communities throughout the nation. As part of this, we launched our American Dream Commitment in 2000 to provide affordable housing finance to 18 million underserved families by the end of the decade. After four of the strongest years in housing and mortgage finance industry history, we’ve already surpassed the top-line goals of that commitment. But we know that our work is far from complete, which is why we announced our expanded American Dream Commitment in January 2004.
Our progress in meeting the goals of the expanded American Dream Commitment depends on our in-depth understanding of minority consumers, which is why objective research that helps us bring the housing market into sharper focus is so important. Fannie Mae is already putting our experience and expertise to work with targeted initiatives aimed at addressing some of the gaps identified in this year’s survey, including:
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Providing free technology such as Home Counselor Online, enabling counseling agencies and lenders to serve more first-time home buyers, including those in minority communities;
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Creating f lexible new underwriting pilots to reach consumers who are not otherwise well served by the mortgage finance system;
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Expanding efforts to fight predatory lending to protect borrowers and combat fraud that preys on the lack of accurate consumer information in minority communities;
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Initiating joint partnerships to make homeownership more accessible to immigrant and minority communities in places such as Atlanta, Baltimore, Houston, Dallas-Fort Worth, Los Angeles, Philadelphia and Washington, DC; and,
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Focusing on housing needs in rural areas and Native American tribal lands where there are gaps in the availability and affordability of housing and mortgage credit.
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Last year was the greatest year in housing and housing finance history. Of even greater significance, however, is the chance we have every day at Fannie Mae and throughout our industry to write the next chapter in America’s housing success story. Solid research, like that found in the 2003 National Housing Survey and Homeownership Gaps, gives us an important foundation for further progress.
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