An increasing number of renters are worried they will never be able to buy a home, with many pointing to the lack of affordability as the main culprit, according to a survey released Friday by Redfin.
Almost 40 percent of renters do not believe they will ever own a home, a double-digit increase from last summer, when 27 percent of respondents said the same.
Affordability is the biggest obstacle preventing renters from believing they could become homeowners.
More than 1 in 4 renters, 44 percent, don’t believe they will be able to purchase a home due to affordability.
The second-leading reason, mentioned by 35 percent of respondents, was being able to save for a down payment, closely followed by 33 percent who cited the affordability of mortgage payments, and then high mortgage rates.
Fourteen percent said they were not interested in being homeowners, according to the survey.
Home prices have gone up by 40 percent since 2019, Redfin noted, a hike attributed to a national shortage of homes and an increase in purchases during the pandemic. Rising interest rates since the end of the pandemic have increased the costs of mortgages since then.
To afford a starter home, first-time homebuyers would have to earn around $76,000, according to a Redfin analysis published in late March. That represents an 8 percent increase since last year.
Many renters struggle with making their housing payments; 24 percent said they “regularly” struggle to make monthly housing payments. Close to half said they sometimes struggle.
“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 survey was commissioned by Redfin and included around 3,000 U.S. residents. The report concentrated on 1,000 respondents who said they were renters.
Tyler Mitchell