At Inman Connect Las Vegas, July 30-Aug. 1 2024, the noise and misinformation will be banished, all your big questions will be answered, and new business opportunities will be revealed. Join us.
As home prices continue to climb and mortgage rates show no signs of dropping, renters are becoming less and less confident they will ever own a home, according to a new report.
The report, released Friday by Redfin, found that 38 percent of renters don’t believe they will ever own a home — up from 27 percent less than a year ago, based on the answers of 1,000 survey respondents in February 2024 and May 2023.
The main roadblock renters face is a lack of affordability, with 44 percent of renters who don’t believe they will own a home in the future believing so because available homes are too expensive. Thirty-five percent don’t believe they can save for a down payment and 33 percent don’t believe they can afford mortgage payments, while 14 percent simply aren’t interested in owning a home, according to the report.
Home prices have risen more than 7 percent in the past year alone, while monthly mortgage payments have risen more than 10 percent at the same time, which explains in part why renters are feeling even less optimistic about homeownership than they were in 2023.
“Housing costs are high across the board, but renting is a more affordable and realistic option for many Americans right now — especially those who have never owned a home and aren’t able to tap into equity from a previous sale,” Redfin Chief Economist Daryl Fairweather said in a statement.
“While owning a home is usually a sound long-term investment, the barriers to entry and upfront costs of buying are higher than renting. Buying typically requires a sizable down payment and approval for a mortgage — things that are difficult for many people today, when the typical down payment is near $60,000 and mortgage payments are sky-high. The sheer expense of purchasing a home is causing the American dream of homeownership to lose some of its shine.”
Broken down generation by generation, Gen Z renters are far more likely to believe they will own a home than older renters, with just 8 percent of Gen Z respondents believing they will never own a home, compared to 22 percent of millennials, 40 percent of Gen Xers and 80 percent of Baby Boomers.
This can likely be attributed to Gen Z being in the early stages of their career, with more time ahead of them to become homeowners compared to millennials who are approaching or are already in their 40s and, perhaps, feeling less hope about their chances.
