Redfin Reports Nearly 40% of Renters Think They’ll Never Own a Home, Up From 27% Last Year
April 12 2024 - 8:00AM
Business Wire
Lack of affordability is the most commonly
cited reason renters don’t believe they’ll ever own a home
(NASDAQ: RDFN) — Nearly two in five (38%) U.S. renters don’t
believe they’ll ever own a home, up from roughly one-quarter (27%)
less than a year ago, according to a new report from Redfin
(redfin.com), the technology-powered real estate brokerage.
Lack of affordability is the prevailing reason renters believe
they’re unlikely to become homeowners. Nearly half (44%) of renters
who don’t believe they’ll buy a home in the near future said it’s
because available homes are too expensive. The next most common
obstacles: Ability to save for a down payment (35%), ability to
afford mortgage payments (33%) and high mortgage rates (32%).
Roughly one in eight (14%) simply aren’t interested in owning a
home.
This is according to a Redfin-commissioned survey of roughly
3,000 U.S. residents, including about 1,000 renters, conducted by
Qualtrics in February 2024.
Buying a home has become increasingly out of reach for many
Americans due to the one-two punch of high home prices and high
mortgage rates. First-time homebuyers must earn roughly $76,000 to
afford the typical U.S. starter home, up 8% from a year ago and up
nearly 100% from before the pandemic, according to a recent Redfin
analysis.
Home prices have risen 7% in the last year alone, and monthly
mortgage payments have risen more than 10%, which helps explain why
renters today are more likely than they were last year to say they
don’t see themselves owning a home anytime soon.
Many renters can’t fathom homeownership because they’re already
struggling to afford their monthly housing costs. Nearly
one-quarter (24%) of renters say they regularly struggle to afford
their housing payments, and an additional 45% say they sometimes
struggle to do so.
Rents have soared over the last few years because so many people
moved during the pandemic, upping demand for rentals. The median
U.S. asking rent is roughly $2,000, near the record high hit in
2022—but the good news for renters is that prices aren’t growing
nearly as fast as they were during the pandemic, partly because an
influx of apartment supply is taking some of the heat off
prices.
“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,” said Redfin Chief Economist
Daryl Fairweather. “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.”
Gen Z renters are most likely to believe they’ll own a
home
Broken down by generation, Gen Z renters are by far the most
likely to believe they will become homeowners. Just 8% of Gen Z
renters believe they’ll never own a home, compared to 22% of
millennials, 40% of Gen Xers and 81% of baby boomers.
That stands to reason, as adult Gen Zers (aged 18-27) are in the
early stages of their careers and have a lot of time to eventually
become homeowners. Older generations, especially baby boomers, may
have already owned a home and decided to rent for the convenience
and low-maintenance lifestyle, or are on a fixed income.
To view the full report, including charts and methodology,
please visit:
https://www.redfin.com/news/renters-becoming-homeowners-2024
About Redfin
Redfin (www.redfin.com) is a technology-powered real estate
company. We help people find a place to live with brokerage,
rentals, lending, title insurance, and renovations services. We run
the country's #1 real estate brokerage site. Our customers can save
thousands in fees while working with a top agent. Our home-buying
customers see homes first with on-demand tours, and our lending and
title services help them close quickly. Customers selling a home
can have our renovations crew fix it up to sell for top dollar. Our
rentals business empowers millions nationwide to find apartments
and houses for rent. Since launching in 2006, we've saved customers
more than $1.6 billion in commissions. We serve more than 100
markets across the U.S. and Canada and employ over 4,000
people.
Redfin’s subsidiaries and affiliated brands include: Bay Equity
Home Loans®, Rent.™, Apartment Guide®, Title Forward® and
WalkScore®.
For more information or to contact a local Redfin real estate
agent, visit www.redfin.com. To learn about housing market trends
and download data, visit the Redfin Data Center. To be added to
Redfin's press release distribution list, email press@redfin.com.
To view Redfin's press center, click here.
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version on businesswire.com: https://www.businesswire.com/news/home/20240412629697/en/
Redfin Journalist Services: Ally Braun, 206-588-6863
press@redfin.com
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