Nearly 40% of U.S. renters don’t believe they’ll ever own a home, up from 27% last year.
Nearly 38% of U.S. renters now doubt they will ever own a home, a significant increase from around 27% less than a year ago, according to a recent report from Redfin, the technology-powered real estate brokerage.
The main obstacle cited by renters is the lack of affordability in the housing market. About 44% of renters who don't see homeownership in their near future believe that homes on the market are too expensive. Other common reasons include the difficulty of saving for a down payment (35%), concerns about affording mortgage payments (33%), and high mortgage rates (32%). Additionally, roughly 14% of renters simply do not have an interest in owning a home.
These findings are based on a survey conducted by Qualtrics in February 2024, which involved approximately 3,000 U.S. residents, including about 1,000 renters.
For many Americans, buying a home has become increasingly unattainable due to the combination of high home prices and mortgage rates. First-time homebuyers now need to earn around $76,000 to afford the typical starter home in the U.S., an 8% increase from a year ago and nearly double the pre-pandemic level, according to a recent analysis by Redfin.
Over the past year, home prices have risen by 7% and monthly mortgage payments have increased by more than 10%. This explains why renters today are more likely than last year to believe that owning a home is not feasible in the near future.
Many renters are struggling to envision homeownership because they are already facing challenges in affording their monthly housing costs. About 24% of renters report regularly struggling to pay their housing expenses, while an additional 45% say they sometimes face difficulties.
Rent prices have surged in recent years due to increased demand for rentals during the pandemic. The median U.S. asking rent is currently around $2,000, close to the record high set in 2022. However, rent prices are not rising as rapidly as during the pandemic, partly due to an increase in apartment supply, which has eased the pressure on prices.
Daryl Fairweather, Chief Economist at Redfin, commented on the situation, stating, "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."
When broken down by generation, Gen Z renters are the most optimistic about eventually owning a home. Only 8% of Gen Z renters believe they will never own a home, compared to 22% of millennials, 40% of Gen Xers, and 81% of baby boomers. This optimism among Gen Z renters may be due to their early career stages and the belief that they have time to achieve homeownership, unlike older generations who may have already owned a home or opted for renting due to lifestyle preferences or fixed incomes.
