94% of Young Renters Want to Buy
December 17, 2015 | Darrick G. Klamut
Nearly all renters 34 years of age or younger questioned in a new survey from the National Association of REALTORS® say they want to own a home in the future. The survey, Housing Opportunities and Market Experience (HOME), tracks topical real estate trends, and asks consumers whether or not it’s a good time to buy or sell a home and about their expectations and experiences in the mortgage market.
“Despite entering the workforce during or immediately after the worst of the financial and housing crisis, the desire to become a homeowner appears to be a personal goal for a convincing majority of young renters,” says NAR Chief Economist Lawrence Yun, adding that market conditions are creating a “sizeable, pent-up demand for buying.”
Looking at renters overall, 83 percent say they want to own, and 77 percent believe homeownership is part of their American Dream.
The monthly survey, the results of which NAR will release quarterly, also fuels an index tracking the financial outlook of households. The Personal Financial Outlook Index has slowly trended upward since the tracking began in March, and in December reached its highest reading. While responses have been steadily becoming more positive overall within the index, the most optimistic segments were younger households, renters, and those in urban areas.
“Young adults, who make up the majority of all renter households, are typically more optimistic about their future,” says Yun. But, despite a sunnier view of their own prospects, only half of all respondents (both renters and owners) believe the economy is currently improving, and 44 percent think the economy is actually in a recession. Renters were slightly more optimistic about current economic conditions, with 57 percent believing the economy is improving. Yun says this “can be attributed to the fact that some areas have been slow to recover and wages have yet to grow in a meaningful way for far too many families.”
Thankfully, confidence in the economy is not a prerequisite for an interest in home ownership; 76 percent of renters who don’t think the economy is improving still want to eventually buy a home. Among all surveyed age groups, 84 percent believe owning a home is a good financial decision. A majority of both homeowners (82 percent) and renters (68 percent) say they believe that it’s a good time to buy a home, and 61 percent of current owners believe it is a good time to sell.
So what’s keeping some out of the market? The top two reasons given by renters for not currently owning was the inability to afford it (53 percent) and needing the flexibility of renting (19 percent). When asked what would likely be the main reason for buying in the future, 33 percent of renters cited getting married, starting a family, or retiring as a trigger. Another 26 percent said an improvement in their financial situation would make the difference.
Also, consumers are not nearly as bullish about the mortgage market as they are about housing. Around two-thirds of respondents predict it would be very or somewhat difficult to obtain a mortgage at this time, and 5 percent of renters surveyed had recently tried and failed to obtain financing for a home.
Meet the New HOME Survey
From March 2015 until earlier this month, survey research firm TechnoMetrica Market Intelligence contacted U.S. households via random-digit dial (one-third via cell phones and two-thirds via land lines). Approximately 900 qualified households responded to the survey each month, adding up to a total of 9,034 household responses being represented in this iteration of the report. The association may add new questions to the survey as the need arises to gather data about timely topics impacting real estate. The next quarterly report of HOME Survey data is scheduled to be released by NAR on Tuesday, March 15, 2016.