Although only half of surveyed households believe the economy is currently improving, nearly all young renters eventually want to buy a home and compared to earlier this year an increasing share believes their personal financial situation will improve in the months ahead.
The survey data reveals that an overwhelming majority, some 94%, of current renters who are 34 years of age or younger want to own a home in the future. Overall, 83% of polled renters have a desire to own and 77% believe homeownership is part of their American Dream.
Lawrence Yun, NAR chief economist, said that the survey's findings debunk the notion that young adults aren't interested in buying a home. ‘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,’ he pointed out.
‘Furthermore, there appears to be sizeable, pent-up demand for buying that currently remains untapped because of a variety of economic and personal reasons impacting many households,’ he added.
The top two reasons given by renters for not currently owning was the inability to afford to buy and needing the flexibility of renting rather than owning at 53% and 19% respectively.
When asked what would likely be the main reason for buying in the future, renters cited lifestyle considerations such as getting married, starting a family or retiring and an improvement in their financial situation at 33% and 26%.
‘A combination of factors such as rising rents and home prices, limited supply, repaying student debt, and getting married and having children later in life has more to do with the currently underperforming share of first time buyers than the idea that buying a home is not as desirable as it used to be,’ Yun explained.
Despite uncertainty about the economy's current performance, at least 84% of all households within all surveyed age groups and education levels believe owning a home is a good financial decision. When asked if they believe this strongly or moderately some 76% who believe it's a good decision feel strongly about it.
Additionally, at least 85% of surveyed households in each age category as well as across all education levels believe home ownership is part of their personal American Dream. The most appealing aspects of homeownership cited by those with this feeling include a place to raise a family, owning their own place and a nest egg for retirement at 36%, 26% and 14% respectively.
NAR's survey found that more home owners than renters during the polling period believe that it's a good time to buy a home at 82% compared to 68%. Furthermore, of those who thought it was a good time to buy, 645 felt strongly about buying. Among current owners, 61% believe it is a good time to sell a home, of which 53% felt strongly that it was a good time to sell.
According to the survey some 65% think it would be very or somewhat difficult to obtain a mortgage. Furthermore, there are differences among income brackets. Renter households making between $30,000 and $40,000 were the most likely to be declined a mortgage at 10%, while 51% of those who make more than $50,000 a year have not tried but feel confident they would succeed in getting a mortgage. Overall, 5% of renters have recently tried and failed to obtain financing for a home.
Reflecting the ongoing recovery of home values throughout most of the country, 89% of respondents said home prices in their communities have either risen or stayed the same in the past year. Looking ahead toward the next six months 91% of respondents believe home prices in their community will increase or stay the same.
‘Young adults, who make up the majority of all renter households, are typically more optimistic about their future. As more of them settle down and begin plans to start a family, the allure of owning their own home as well as the long term financial stability home ownership provides will drive their emergence into the housing market,’ said Yun.
‘However, the extent to how fast this occurs will greatly depend on more entry level housing supply coming onto the market and needed improvements in affordability conditions,’ he added.
