Home ownership is still part of the American Dream, new research suggests
Despite weakening optimism from non-home owners in the US at the end of last year that now is a good time to buy, an overwhelming majority said they do want to own a home in the future, new research shows
The latest consumer survey data from the National Association of Realtors (NAR) also found that non-homeowners’ lifestyle changes and improvements in their financial situation outweigh seeing their rent increase as the main motivators for deciding to buy a home.
They survey, which covers those renting a home and those living with other family members, found that the share feeling that they could not afford to buy reached its highest in the last three months of the year at 56%.
The swift price growth and painfully low supply levels in much of the country in 2017 also appeared to have dealt a blow to the confidence among non-owners that now is a good time to buy. After reaching a high of 62% in the third quarter, the share of non-owners who believed now is a good time to buy slipped to 5% at the end of the year.
According to Lawrence Yun, NAR chief economist, severe inventory shortages are making home buying less affordable and are dimming optimism among many renters who desire to be home owners.
‘A tug of war continues to take place in many markets throughout the country, where consistently solid job creation is fuelling demand, but the lack of supply is creating affordability constraints that are ultimately pulling aspiring buyers further away from owning,’ he said.
‘These extremely frustrating conditions continue to be most apparent at the lower end of the market, which is why the overall share of first time buyers remains well below where it should be given the strength of the job market and economy,’ he added.
Even with the dip in morale about buying over the past year, respondents’ views about home ownership are still overwhelmingly positive. Roughly three quarters of non-owners each quarter said that they eventually want to own a home and also believe that owning a home is part of their American Dream.
As for the main reasons non-owners would buy a home in the future, a change in lifestyle such as getting married, starting a family or retiring was the top choice at 24% to 32% in each quarter, followed by an improvement in their financial situation at 26% to 30% and the desire to settle down in one location at 12% to 16%.
According to the survey some 51% of current renters expect their rent to increase this year and if this happens some 42% said that they give up their lease and 25% would move to a cheaper rental. Only 15% said it would prompt them to buy.
‘Housing demand in 2018 will be fuelled by more millennials finally deciding to marry and have kids and the expectations that solid job growth and the strengthening economy will push incomes higher,’ said Yun.
‘However, with prices and mortgage rates also expected to increase, affordability pressures will persist. That is why it is critical for much of the country to start seeing a significant hike in new and existing housing supply. Otherwise, many would-be first time buyers will be forced to continue renting and not reach their dream of being a home owner,’ he concluded.