Home prices were down nearly 34 percent at the end of March from their pre-recession peak in 2006, according to the latest Standard & Poor’s/Case-Shiller National Home Price Index. Still, more than 80 percent of adults say that buying a home is the best investment a person can make.

Two recent nationwide studies — one by the Pew Research Center and another by real estate website Trulia — revealed that not only do consumers prefer to buy than rent, but buying is more affordable than renting in 78 percent of the nation’s cities.

The Pew Research Center surveyed 2,142 adults between March 15 and March 29, 2011. The survey sample included 57 percent of respondents who own a home and 30 percent who are renters. The remainder has other arrangements, such as living with family members.

The study found that 37 percent "strongly agreed" and 44 percent "somewhat agree" that homeownership is the best investment a person can make. When this same question was asked two decades ago in a CBS News/New York Times survey, 49 percent" strongly agreed" and 35 percent "somewhat agreed," the Pew study revealed.

Other key findings:

  • Homeowners are not blind to what has happened to home prices, nor are they expecting a speedy recovery. About half (47 percent) say their home is worth less now than before the recession began, and 31 percent say its value has stayed the same. Just 17 percent say their home is worth more.
  • Of those who say their home has lost value, 86 percent say they expect it to take at least three years for values to recover to pre-recession levels; 42 percent say it will take at least six years; and 10 percent say it will take more than 10 years.
  • Most renters are drawn to the allure of homeownership, even in the face of the five-year decline in prices. Asked if they rent out of choice or because they cannot afford to buy a home, just 24 percent of renters say they rent out of choice. And, when renters are asked if they would like to continue to rent or if they would prefer one day to buy a home, 81 percent say they would like to buy.
  • Homeowners who were hardest hit by the burst housing bubble are also among the least optimistic about their short-term financial prospects. Among those who say their home is worth a lot less now than it was before the recession, 31 percent expect their household financial situation to get worse over the next year. This compares with only 21 percent of those who say the value of their home increased or stayed the same over the course of the recession.

According to Trulia’s Rent vs. Buy Index, it’s cheaper to buy a home rather than rent in 78 percent of America’s largest cities, but Seattle is not one of them.

Folks who would like to buy in some neighborhoods in Seattle, Boston, San Francisco, Portland, Los Angeles and Oakland, Calif., face a bigger challenge when it comes to deciding between renting and buying a home. The cost of homeownership in these coastal cities continues to be more expensive than renting. However, it may make more financial sense to buy "depending on the situation," the Trulia survey suggested.

While the cost of renting in downtown Seattle rose significantly in the past quarter, the cost of buying in most in-city neighborhoods gave renting a financial edge.

The index compares the cost of buying and renting a two-bedroom apartment, condominium or townhouse in the 50 largest U.S. cities. Since last quarter, buying a home has become more affordable than renting in nearly four out of five major cities.

Calculations for the total cost of homeownership include mortgage principal and interest, property taxes, insurance, closing costs, association dues, and private mortgage insurance. Also included are tax advantages from mortgage interest, property tax and closing-cost deductions.

Calculations for total rental cost include rent and renters insurance.

So, in most areas of the country, homeownership is not only desirable but also a prudent financial move to make. There are also the intangibles that cannot be quantified, including the memories of raising a family in your own home. Perhaps that’s part of the definition of "best investment a person can make."

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