Up from 27% less than a year ago, 38% of U.S. renters don’t believe they’ll ever own a home, according to a new report from Redfin.
With lack of affordability as the prevailing reason, nearly half (44%) of renters don’t believe they’ll buy a home soon because available homes are too expensive. Other common obstacles include: the ability to save for a down payment (35%), the ability to afford mortgage payments (33%), and high mortgage rates (32%). One in eight (14%) note they aren’t interested in owning a home.
“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,” says Redfin chief economist Daryl Fairweather.
“While owning a home is usually a sound long-term investment, the barriers to entry and upfront costs of buying are higher than renting. Buying typically requires a sizable down payment and approval for a mortgage—things that are difficult for many people today, when the typical down payment is near $60,000 and mortgage payments are sky-high. The sheer expense of purchasing a home is causing the American dream of homeownership to lose some of its shine.”
In the last year alone, home prices have risen 7%, and monthly mortgage payments have risen more than 10%. First-time home buyers must earn roughly $76,000 to afford the typical U.S. starter home, up 8% from a year ago and up nearly 100% from before the pandemic, according to a recent Redfin analysis.
Twenty-four percent of renters say they regularly struggle to afford their housing payments, and an additional 45% say they sometimes struggle to do so.
With median U.S. asking rent at roughly $2,000—near the record high in 2022—renters may find some relief as prices aren’t growing as fast as they were during the pandemic, partly because an influx of supply.
By generation, Gen Z renters are by far the most likely to believe they will become homeowners. Just 8% of Gen Z renters believe they’ll never own a home, compared with 22% of millennials, 40% of Gen Xers, and 81% of baby boomers.
