The majority of U.S. renters are struggling financially and plan to remain renters for the next three years, according to recent Freddie Mac survey data. However, the recent financial crisis did not tarnish renters' dreams of homeownership with 91 percent of them viewing homeownership as something of which to be proud.
"It's no secret that for the last several years, consumers have felt more strapped financially, particularly renters," says David Brickman, executive vice president of Freddie Mac Multifamily. "Many renters are not buying homes because of a perceived lack of ability to afford the down payment or mortgage and poor credit history. But there also is a segment of renters who simply do not want the responsibilities of owning a home."
Freddie Mac commissioned Harris Poll to survey more than 2,000 U.S. adults online in August 2014 to get their perceptions about renting in the post financial crisis marketplace. A presentation on the research results is available here.
The majority of renters say they tend to live paycheck to paycheck. 45 percent of renters say they have just enough money to get by, and 17 percent say they do not have enough money for basics, like food and housing until the next payday. In comparison, only 38 percent of homeowners indicate a similar financial hardship.
Results show that 61 percent of renters believe they will continue to rent in the next three years, despite 91 percent of them viewing homeownership as something of which to be proud. While 39 percent of all renters say they expect to purchase a home in the next three years, the remainder plan to continue to rent. Those most likely to buy a home in the next three years are from ages 25-44.
Younger adults are more inclined toward buying a home than older ones. For example, 47 percent of renters aged 25-34 and 58 percent of renters aged 35-44 responded that they will purchase a home in three years, compared to 27 percent for people age 45-64. In addition, if a renter hasn't owned a home by age 45, then chances are they will continue to rent throughout their lifetime.
According to renters, the top three favorable factors about renting are:
- Provides freedom from home maintenance responsibilities (78 percent strongly or somewhat agreed);
- Allows more flexibility over where you live (68 percent strongly or somewhat agreed); and
- Protects against home price declines (66 percent strongly or somewhat agreed).â€¨
According to renters, the top three favorable factors about homeownership are:
- Something of which to be proud (91 percent strongly or somewhat agreed);
- Can be passed on to your children (90 percent strongly or somewhat agreed); and
- Allows more flexibility to design it the way you want (89 percent strongly or somewhat agreed).
Freddie Mac intends to do this type of research quarterly to learn about renters' preferences towards the housing choices available to them, the constraints preventing them from obtaining housing that they think would better suit their needs, and the drivers for their decisions.
For more information, visit www.freddiemac.com. Reprinted with permission from RISMedia. ©2014. All rights reserved.