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Most Americans Still View Their Mortgage Payments as Affordable, Fannie Mae Finds

A recent post from two Fannie Mae researchers revealed interesting findings on consumers’ housing preferences and beliefs about housing affordability in 2021. In the post, the researchers discussed results from Fannie Mae’s Q3 2021 National Housing Survey. 

The researchers concluded that consumers are more likely than before to believe that housing in their area is becoming less affordable and more difficult to find. In fact, the number of consumers who shared this view increased by more than 20 percentage points to 69% of the population. 

While most survey participants believed the overall housing market as unaffordable and highly competitive, a majority also think their own housing situation is affordable. For example, 92% of mortgage holders believed that their current home was at least somewhat affordable. Consumers who have this belief are likely not in the market for a new home since they purchased a property many years ago when the market was cooler. 

In simple terms, many survey respondents see their own housing situation as affordable, while believing the wider market is unaffordable and competitive. The authors of the Fannie Mae report believe that this disincentivizes those individuals from looking at other properties, leading to less moving activity and fewer homes on the market. 

 “While this can be true for either homeowners or renters, in our view homeowners probably feel this pressure a bit more acutely, since a stable, affordable mortgage payment would likely disincentivize many from selling and having to go through the purchase process again,” the researchers said in the blog post.

The authors have a point. By many measures, housing inventory is at an all-time low considering the amount of demand. During the four-week period ending November 28, 2021, the number of active listings decreased by 23% compared to the same time period in 2020 and by 42% compared to 2019. New listings were also down 4% compared to 2020 but were 12% higher than the number of new listings in 2019.

The Fannie Mae survey also looked at the impacts of the shift to work from home on housing and commuting preferences. A third of respondents said they can work from home at least sometimes, including 40% of homeowners and 31% of renters. Renters who work remotely are way more likely to be open to the idea of moving further away from the office compared to homeowners. The researchers conclude this is the case because renters can move around much more easily than homeowners. 

With high home prices and mortgage interest rates above 5.0%, future surveys will likely find that the number of Americans who rate their mortgage payments and housing situations as affordable is on the decline. 

Rising interest rates and high sales prices will also have an impact on the number of active listings, according to Mark Palim, deputy chief economist at Fannie Mae. 

“We know from the past that when mortgage rates move up significantly, rapidly in a short period, that home sales slow,” Palim said. “So you know, people who have a 3% mortgage or a 3.5% rate mortgage. They’ve got to take that into account, right? They’re not going to want to give that mortgage up easily.”

Tyler graduated from Virginia Commonwealth University in 2017 with a Bachelor's degree in Urban and Regional Studies. Currently based in Los Angeles, he works as a freelance content writer and copywriter for companies in real estate, property management, and similar industries. Tyler's main professional passion is writing about critical issues affecting big and small cities alike, including housing affordability, homelessness, inequality, and transportation. When he isn't working, he usually plans his next road trip or explores new neighborhoods and hiking trails.