Owners Placing Greater Value in Their Homes

WASHINGTON — Since the pandemic, many consumers are using their homes in new and different ways including living with multiple family members under one roof, expanding outdoor living spaces and even growing some of their own food. With the rise in home prices over the last few years, changes in consumers' desires have played a role in driving demand for the limited number of homes available on the market.

Fannie Mae’s latest National Housing Survey analysis explores how consumers' perceptions of the overall value of their home have changed based on new needs and utilization, and how changing needs might impact future homebuying decisions.

Key findings:

• Almost half of consumers say their home has become more important to them over the past few years, compared to just 10% who say their home has become less important to them. This shift is driven primarily by consumers' appreciation for the location of their home and the sense of security it offers.

• More than half of consumers say they have made functional changes to how they use their home in the last few years. These changes include using the home as a gym or for hobbies, growing food or gardening, and working from home.

• Although more consumers still say the security and lifestyle benefits outweigh the financial benefits as the best reason to buy a home, this gap has closed significantly since we last asked the question in 2015.

Why consumers are placing greater value in their homes

Far more consumers (44%) say their homes are more important today than a few years ago, compared to just 10% who say their home is now less important. As housing has become increasingly unaffordable in recent years due to higher home prices, mortgage rates, and rents, this sentiment could reflect the fact that many consumers might not have been able to afford their current home in today's market. Notably, homeowners (48%) are somewhat more likely than renters (38%) to say their home has become more important to them.

Among the general population, 63% cited location as the top reason homes have grown more important in recent years. Not far behind is the "sense of security a home offers in uncertain times" (59%). Notably, both location and security are far more important to homeowners (69% and 61%, respectively) than renters (50% and 42%).

Unsurprisingly, the ability to "afford rent or mortgage" is cited as another key driver, and it is true of both mortgage borrowers (60%) and renters (47%). This, again, likely reflects the significant affordability pressures of the recently higher home price and mortgage rate environments, and it may be particularly true of homeowners who purchased or refinanced when mortgage rates dipped below 3% in 2021.

Interestingly, when asked to describe in their own words why their homes have become more important in recent years, consumers were twice as likely to mention lifestyle benefits (67%) such as security, customization or access to outdoor space than financial benefits (34%).

Consumers are using their homes in new ways

More than half of consumers made some sort of functional change to their home in recent years. One-quarter updated their home to better allow for remote work, 19% now use their home for fitness or other hobbies, and 18% are growing food or gardening. Homeowners are slightly more likely than renters to have made one of these adjustments to their home in recent years. Additionally, these changes are more common among surveyed younger and higher-income individuals.

Among those who made functional changes to their home for lifestyle reasons, 44% say the changes resulted in additional monthly savings or income. For example, many consumers were able to work remotely instead of spending money on commuting costs, or exercise at home instead of paying for a gym membership.

Additionally, when asked which parts of their homes have grown the most in value in recent years, nearly half (48%) cited functional features that improved the usage of their home, including having a large backyard or converting bedrooms into workspaces.

Changing consumer needs could affect buying decisions

To best meet their needs now and in the future, most consumers say their home would be more appealing if it had outdoor living space (69%), an extra room for hobbies (61%), and a yard for gardening (60%). Renters find these sorts of upgrades particularly appealing, and they may be drivers for why some renters might seek to make the move into a single-family rental or homeownership.

Although current market dynamics have made renting more affordable than buying in nearly all U.S. metros areas, many consumers are still willing to pay a premium to gain access to the non-financial benefits of homeownership. We know from previous research by Fannie Mae that consumers still have high aspirations to own a home despite the difficult market conditions, driven partly by non-pecuniary reasons. To that end, our latest study finds that renters are significantly more willing than homeowners to say they would pay more to buy a house with proximity to shops, restaurants, public transportation, and work. Additionally, sizable shares of both renters (46%) and homeowners (42%) would pay more for the room needed to accommodate multigenerational living.

Interestingly, consumers today are slightly more likely to tout the financial benefits of homeownership than they were nine years ago (46% in 2024 vs. 39% in 2015) as the best reason to buy a home. This is likely an acknowledgment of the significant run-up in home prices of the last few years, particularly compared to the period of only modest home price growth immediately preceding 2015. Security and lifestyle benefits are still slightly more important, but that gap is narrowing.

In many ways, this research underscores the pandemic's profound impact on consumer housing-related behaviors and attitudes. Many people across America began to view their homes in new and meaningful ways, including, simultaneously, as places to work and safely socially distance. Practically overnight, the implicit value of home changed for millions, which may have even played a role alongside the ongoing lack of sufficient housing supply and historically low mortgage rates in the acceleration in home prices during that period.

Source: Fannie Mae

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