The survey showed a strong majority (85 percent) of homeowners indicating the value of their home has increased since they purchased it. Sixty-one percent said that the value of their home has increased significantly.

"Encouraged by the lowest interest rates in at least a generation, the highest percentage of Americans since 1994 say now is a very good time to buy a home, and a quarter of Americans plan to do so in the next three years, according to this year's survey," said Fannie Mae chairman and CEO Franklin D. Raines.

Buying a home is perceived as a safe and smart investment for 70 percent of survey respondents, as compared to the 38 percent of respondents who said that an IRA or 401(k) plan is a "safe investment with a lot of potential." Only 10 percent felt the same way about stocks.

Two in five Americans said that they follow the housing market very or fairly closely. Among this group, 76 percent said that buying a home is a safe investment with a lot of potential, and 78 percent indicated that it is a somewhat or very good time to buy a home.

One of the most important homeownership benefits cited is the potential financial gain. The investment aspect is a more important reason to buy than either the size or location of a particular house. The financial considerations are second only to safety (65 percent) as the most important aspect of buying a home, with 55 percent of respondents citing affordability and 41 percent identifying potential appreciation in value as being at or near the top of their list.

Interest rates continue to fuel Americans' optimism about the housing market and rank second as the most important reason for buying a home after the long-term financial investment potential. This view is shared by a majority of Americans, of all ages and incomes and in every region of the country.

The vast majority—86 percent—of Americans surveyed believe that housing prices will go up either a little (32 percent) or a lot (19 percent) over the next year or remain about the same (35 percent). Only 8 percent of Americans believe that prices will drop in the coming year. By 44 percent to 18 percent, Americans believe that changes in property values, at least in the short term, are good reasons to buy now.

The survey indicated that housing will continue to power the economy, as more than one in four Americans surveyed are very or fairly likely to buy a home in the next three years. Specifically, the survey results indicate that minorities and baby boomers are contributing to housing demand. In fact, rising housing prices combined with low interest rates appear to be encouraging many people to buy rather than discouraging them.

Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors at www.silvar.org. Send questions on any topic to jnewton@jnpr.com.