(NASDAQ: RDFN) – Nearly a third (32%) of renters nationwide are renting because they can’t afford a home where they want to live, according to a new report by Redfin (redfin.com), technology-powered real estate brokerage. Meanwhile, 30% of renters are unable to save for a down payment, and 45% say debt is preventing them from buying a home.
The report is based on a survey commissioned by Redfin of 1,500 US residents who are currently renting the home they live in and/or looking for a rental. Respondents to this question had the option of choosing more than one answer.
“A lot of American renters want to buy a house, but they’re stuck in renting because it’s just too expensive to break into the housing market,” said Redfin chief economist Daryl Fairweather. “This is all the more true since they are often in competition with investors or other well-heeled individual buyers. Unfortunately, the fact that buying a home is out of reach for so many Americans is a factor of inequality: not owning a home means missing out on rising home values, one of the main means of creating and transmitting generational wealth in this country. ”
“But the housing market is seeing early signs of a slowdown, which could benefit first-time home buyers,” Fairweather continued. “Mortgage rates are rising rapidly, which is a double-edged sword: higher rates mean higher monthly mortgage payments, but they will also end up dampening competition for homes, which will cause fewer homes to sell at above their asking price.”
The housing market is unaffordable for many would-be first-time buyers, largely because house prices have soared since the start of the pandemic, with remote working and last year’s record mortgage rates driving an explosion in demand. Homes are 34% more expensive than they were before the pandemic began, and potential buyers have half as many homes to choose from. Rental prices in the United States are also soaring, with the average monthly asking rent rising 15% year-over-year in February to $1,901.
Still, renting is a better option for some people. Twenty percent of respondents said they were renting because they had a good deal and buying a house would cost more and 17% couldn’t find a house they wanted to buy.
Nearly half of renters say debt prevents them from buying a home
Debt is the most common financial barrier for renters, with nearly half (45%) of U.S. renters saying debt related to credit cards, student loans, medical bills, car loans, and more. stopped them from trying to buy a house. Respondents to this question had the option of choosing more than one answer.
Paying off debt can make it difficult to make a down payment and/or monthly mortgage payments, especially now that house prices have skyrocketed. Additionally, homebuyers with high debt may have difficulty getting approved for a mortgage. But buying a home can still be a smart financial decision, even with a lot of debt. Increasing home equity can even help pay down debt down the line.
“Debt doesn’t have to be a curse,” Fairweather said. “My advice for aspiring homeowners is to make a monthly budget and add debt to their expenses with things like gas, groceries, or entertainment. Saving for a down payment should be another line in the budget, keeping in mind that there are mortgage options like FHA loans that require little to no money.Prospective buyers should also get pre-approved for a mortgage so they know how much they can reasonably spend on a monthly, and also add it to their budget.
Almost as many respondents (44%) said home prices were too high where they would want to buy, and 38% said they didn’t have enough income to save money to buy a home.
Meanwhile, nearly a quarter (23%) of renters said pandemic-related setbacks, such as losing a job or salary, had stopped them from buying, and 19% said High rental prices were a factor.
Only 12% of renters said financial barriers are not a factor preventing them from buying a home.
Although financial obstacles prevent most renters from buying a home, 56% of respondents said they would not consider making any compromises or sacrifices to save for a down payment or buy a home.
At least 1 in 10 tenants who move do so because they are forced to leave their dwelling for one reason or another
We also surveyed tenants considering moving for their motivation and found some notable trends.
While the most common reason for moving was to move to a better house (29%) and to be in an area with lower rent (20%) or lower cost of living (18%), a proportion surprisingly important was moving for external reasons. their own will. Eleven percent said their landlord is selling and 10% are moving because their current rental doesn’t have enough heat, hot water, electricity, etc. Six percent move because their landlord is terminating their lease. Respondents to this question had the option of choosing more than one answer.
To view the full report, including graphics, please visit: https%3A%2F%2Fwww.redfin.com%2Fnews%2Fsurvey-renters-homebuying-affordability
Redfin(www.redfin.com) is a technology-driven real estate company. We help people find a home with brokerage, instant home buying (iBuying), rental, loan, title insurance, and home improvement services. We sell houses for more money and charge half the fees. We also run the #1 real estate brokerage site in the country. Our homebuyer clients see homes first with on-demand viewings, and our loan and title services help them close quickly. Customers selling a home can receive an instant cash offer from Redfin or have our renovation team repair their home to sell for the best price. Our rental business helps millions of people across the country find apartments and houses to rent. Since launching in 2006, we’ve saved our clients over $1 billion in commissions. We serve over 100 markets in the United States and Canada and employ over 6,000 people.
For more information or to contact a local Redfin estate agent, visit www.redfin.com. To learn more about housing market trends and download data, visit Redfin+Data+Center. To be added to Redfin’s press release mailing list, email [email protected]. To see Redfin’s press center, click+here.
See the source version on businesswire.com: https://www.businesswire.com/news/home/20220407005241/en/