Homeowners were asked about various financial products and investments and how they fit into their overall financial portfolio. A majority (72 percent) report that the equity in their home is their most important investment. Among homeowners who have a home equity loan or line of credit more (82 percent) say their home equity is most important.
When asked to select the most important benefit in owning a home from several options, the top choices were that it provides a sense of security (25 percent) and it is a great investment (24 percent). Women were more likely than men, by a 3-to-2 ratio, to view the most important benefit as security, while men were more likely than women, by a 3-to-2 ratio, to see their home as an investment.
Younger homeowners ("Generation Y," defined as ages 18-29) are more inclined than the older generations ("Baby Boomers," ages 42-60, and "War Babies," ages 61 and over) to view real estate as an important investment option in their financial portfolios (44 percent vs. 32 percent).
Despite the recent general slowdown in housing prices, the survey found that 90 percent of homeowners expect their own home value to stay the same (27 percent) or increase (63 percent) during the next 12 months. A large majority (80 percent) are satisfied with their home purchase, indicating they would likely purchase their current home again. Additionally, the majority (54 percent) said they like their current home and would make improvements.
"This survey finding suggests that homeowners are seeing the conditions of their local housing markets and concluding that it is more likely that price declines will be moderate not steep," said Doreen Woo Ho, president of Wells Fargo's Consumer Credit Group, one of the nation's leading national home equity lenders. "There is a divergence of opinion among housing market experts today on how much prices might adjust. This survey data gives credence to those who hold the view that we're more likely to have stability over time.
"In addition, homeowners clearly want to make improvements to their homes, an indication that they expect to gain a return on that investment," said Woo Ho. "This survey shows a shift in the traditional mindset that the home only offers comfort and security for the future. It's now considered a major part of homeowners' financial portfolios."
Homeowners "Dream Green" with Environmentally Friendly Improvements
Respondents were asked to choose an improvement they would make to their home if given $50,000. They were offered nine options to choose from, including luxury home remodels, such as a state-of-the-art chef's kitchen, a cutting-edge entertainment room and a bedroom suite or master bath.
"We expected the majority of respondents to select one of the options that would only be aesthetically pleasing, or would add size or value to their home," said Woo Ho. "However, we found that Americans are showing signs of becoming more environmentally aware and want to take actions that save money, help preserve the environment as well as add value to their home."
Respondents' most popular choice (24 percent) among the selections offered is to make environmentally friendly additions, such as insulation, energy efficient appliances, double-paned windows and solar panels. The next most popular selections were a high end chef's kitchen (12 percent) and luxury bedroom suite or master bath (11 percent).
ARM customers concerned about interest rates
One in seven of the homeowners in this survey (14 percent) have an adjustable rate mortgage (ARM). Those most likely to have an ARM are:
* younger homeowners (27 percent of the Generation Y respondents has an
ARM, while 19 percent of Generation X respondents, ages 30-41, has one)
* those with a higher income (19 percent of those with annual incomes of
$75,000 and up) and,
* those with a higher valued home (17 percent of those with homes valued
at more than $200,000).
Of the homeowners with an ARM, 79 percent said that they are concerned about the interest rate on their mortgage increasing, and more than half (56 percent) indicated that they would refinance when their interest rate adjusts. One-fifth (21 percent) plan to take no action.
"We set out to discover what homeowners think about coming rate adjustments," said Woo Ho. "We found that those who have an ARM are more concerned about rising interest rates than those who do not. It's important that homeowners who have an ARM be aware of when the rate on their mortgage is scheduled to adjust, review their options and develop a plan of action, even if it means taking no action at all."
Wells Fargo customers who have an ARM account can sign up to receive Wells Fargo Mortgage Rate Monitor(SM) Alerts, which provide the latest mortgage news, interest rates and local home prices straight to a customer's e-mail inbox. This service includes a notification via email before the customer's interest rate changes so they can act before their monthly payments readjust. The company also offers a variety of other online resources via www.wellsfargo.com , such as a refinance calculator that compares the interest rate on a current mortgage to today's rates to determine if refinancing is the best option. Wells Fargo also has home equity and mortgage specialists in its banking stores and by telephone to help customers who may be concerned about the interest rates on their ARM or similar home equity accounts.
About the survey
The Wells Fargo Third Annual Survey of U.S. Homeowners, conducted by market research firm ICR of Media, PA, and commissioned by the Wells Fargo Consumer Credit Group, polled 1,361 homeowners. Respondents were targeted to closely mirror the U.S. homeowner population by gender, age, region, race and education.
