Nearly 4 in 10 renters in a new nationwide survey say they don’t believe they’ll ever own a home, up nearly a quarter from less than a year ago, per MSN.
The combination of soaring home prices and mortgage rates continues to deter Americans from purchasing homes, with affordability concerns ranking as the primary reason why renters believe they may never become homeowners, according to a Redfin report released on Friday.
Redfin's chief economist, Daryl Fairweather, noted that while homeownership is typically viewed as a wise long-term investment, the current barriers to entry and upfront costs of buying a home are higher than renting. This is especially challenging for those who have never owned a home and cannot leverage equity from a previous sale. The substantial down payment and mortgage approval requirements, which can be difficult to meet, are contributing to the diminishing appeal of the American Dream of homeownership.
The survey conducted by Qualtrics revealed that 38% of U.S. renters now believe they will never own a home, up from 27% in a Redfin survey from March 2023. The most common obstacles cited by renters include:
A recent Redfin analysis showed that first-time homebuyers need to earn approximately $76,000 annually to afford a typical starter home, an 8% increase from the previous year and nearly double the amount before the COVID-19 pandemic. Home prices have surged over 40% since 2019 due to the pandemic-driven housing market frenzy and a shortage of available homes for sale. Although the current average 30-year fixed mortgage rate of 6.82% is lower than the nearly 8% peak last October, it remains more than double the record low rates seen in 2020.
With home prices rising by 7% in the last year and monthly mortgage payments increasing by over 10%, it is not surprising that renters today are more inclined than last year to believe that homeownership is out of reach. The survey also indicated that many renters are already facing difficulties with their monthly housing costs, with nearly a quarter stating that they struggle regularly and 45% reporting occasional struggles to afford their housing payments.
