A growing number of renters fear they will never be able to afford a home, with many pointing to lack of affordability as the main culprit, according to a study. survey released Friday by Redfin.
Nearly 40% of renters do not believe they will ever own a home, a double-digit increase from last summer, when 27% of respondents said the same.
Affordability is the biggest obstacle stopping renters from believing they could become homeowners.
More than 1 in 4 renters, 44 percent, do not believe they will be able to afford a home because of its affordability.
The second top reason, cited by 35 percent of respondents, was the ability to save for a down payment, followed closely by 33 percent who cited the affordability of mortgage payments and then high mortgage rates.
Fourteen percent said they were not interested in being a homeowner, according to the survey.
Home prices have risen 40 percent since 2019, Redfin noted, an increase attributed to the national housing shortage and increased purchasing during the pandemic. Rising interest rates since the end of the pandemic have increased mortgage costs ever since.
To buy a starter home, first-time buyers would have to earn about $76,000, according to a Redfin analysis published at the end of March. This represents an 8% increase since last year.
Many tenants have difficulty paying for housing; 24 percent said they “regularly” struggle to make monthly housing payments. Almost 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 are unable to leverage equity from a previous sale,” chief economist from Redfin. Daryl Fairweather said in a statement.
“While owning a home is generally a solid long-term investment, the barriers to entry and initial purchasing costs 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 close to $60,000 and mortgage payments are sky-high.”
The survey was commissioned by Redfin and included nearly 3,000 U.S. residents. The report focused on 1,000 respondents who said they were renters.
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