Renters see Selves as Homeowners-in-Waiting

News

While
the dream of homeownership has been sidelined for many, it appears to have not been
derailed.   Freddie Mac says the responses of renters to a
recent survey it conducted shows that many are struggling financially but they
still hope to buy
a home.  Eventually.

Freddie Mac surveyed 2,044 adults
in August.  The total included 672 and
the report issued by the company this week relies primarily on the perceptions
of that subgroup about renting in the post financial crisis marketplace.  This is the first in what the company says
will be a quarterly series of surveys “to learn
about renters’ preferences towards the housing choices available to them, the
constraints preventing them from obtaining housing that they think would better
suit their needs, and the drivers for their decisions.”  Except for the financial situation information
directly below all data refers only to responses from the survey subset of
renters.  

Many renters say they tend to live payday to payday; 45 percent say
they have just enough money to get by and 17 percent say they run out of money
for basics, like food and housing before the next payday. However, only 38
percent of homeowners indicated a similar financial hardship.

 

When asked
to agree or disagree with some favorable aspects of renting the top areas of
agreement were that renting:

  • Provides
    freedom from home maintenance responsibilities (78 percent)
  • Allows
    more flexibility about where one lives (68 percent)
  • Protects
    against home price declines (68 percent)
  • Is
    less stressful than owning (65 percent).

When
presented with two negative aspects of renting, 80 percent agreed that a renter
is subject to the whims of the landlord and 61 percent agreed or strongly
agreed that it feels like one is throwing money away.   

Renters were
also presented with a list of favorable factors about homeownership and asked
to agree or disagree. The top factors with which they agreed or disagreed were
that homeownership:

  • Is
    something of which to be proud (91 percent)
  • Can
    be passed on to your children (90 percent)
  • Allows
    more flexibility to design a home the way you want (89 percent)
  • Gives
    you more privacy (86 percent)
  • Protects
    against rent increases (86 percent)
  • Gives
    you more independence and control (81 percent)
  • Is
    an investment that allows you to build wealth (80 percent),

On the
negative side, 50 percent agreed that homeownership is too great a responsibility
and 25 percent said they had no interest in ever owning a home.

While 39
percent
said they expect to purchase a home in the next three years (61 percent
said they would rent for at least three more years), younger renters are more
likely than older ones to hold that hope. 
Forty-seven percent of those aged 25-34 and 58 percent of the 34-44 age
group indicated that three year window compared to only 27 percent of people
45-64 and 21 percent of those over age 65. 
 Fannie Mae said that renters who haven’t
owned a home by age 45 are likely to continue to rent throughout their
lifetime.

The leading
reasons
renters see themselves renting over the next three years are financial.  Half said they did not have money for a down
payment and 38 percent said they could not afford the monthly mortgage payment.  Thirty-one percent pointed to a poor credit
history.  Some however said they expected
to continue to rent simply because they did not want the responsibilities of homeownership
(39 percent) or that they thought it was not a good time to buy from an
investment standpoint.  Younger renters
were more likely to report financial constraints while older one indicated a
reluctance to take on additional responsibilities.  Among those over the age of 65 73 percent said
they did not want the responsibility of owning a home.

“It’s
no secret that for the last several years, consumers have felt more strapped
financially, particularly renters,” said David Brickman, executive vice
president of Freddie Mac Multifamily. “Many renters are not buying homes
because of a perceived lack of ability to afford the down payment or mortgage
and poor credit history. But there also is a segment of renters who simply do
not want the responsibilities of owning a home.”

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