The American Dream of homeownership is not only fading among the young Millennial generation.
Apparently, an increasing number of people in the Baby Boomer and Generation-X age groups have a preference for renting, and do not anticipate buying a home, according to a new research study by Freddie Mac.
“Profile of Today’s Renter,” a new survey by Freddie Mac Multifamily, found that growing segments of the population—Baby Boomers and Generation-Xers in particular—are showing less interest in owning a home.
And, the new research revealed that despite growing economic confidence among renters, affordability remains dominant in driving renter behavior. Here is a summary of the survey:
• 67% of apartment and home renters view renting as more affordable than owning a home, including 73% of baby boomers (aged 53-71).
• Similarly, 67% of renters who plan to continue leasing their housing say they will do so for financial reasons—up from 59% just two years ago.
• 50% of Baby Boomers currently renting do not anticipate buying a home in the future, up 8% from six months ago. Of that half, 35% have no interest in owning, and 15% believe they will never be able to afford it.
• Similarly, 31% of Gen-Xers (aged 38-52) expressed that sentiment, up from 28% from the previous Freddie Mac renters survey. Of those Gen-Xers surveyed, 19% lack interest and 12% believe they will never be able to afford the American Dream.
The 2018 Renter Profile is based on a survey conducted online early this year among 4,115 adults aged 18 years and older, including 1,209 renters. The survey was conducted by Harris Poll, on behalf of Freddie Mac.
“Perceptions of affordability and cost continue to play an outsized role in the choices of America’s renters, as they overwhelmingly see renting as more affordable and the right choice for them—right now,” said David Brickman, executive vice president and head of Freddie Mac Multifamily.
“Remarkably, half of baby boomers who rent do not anticipate owning a home in the future, with a growing number of Generation-Xers following suit,” Brickman said.
“Indeed, we are witnessing an historic shift in preference among older Americans, as they increasingly are choosing the size, convenience and affordability that renting offers over ownership.”
Although the research found that a growing number of renters believe their economic situation has improved compared to last year, it also finds that cost is increasingly driving rental decisions. While 67% of renters stated they will continue renting for financial reasons, that number is significantly higher for Millennials (aged 21-37), jumping 15% from 59% in 2016 to 74% today.
Multifamily renters (versus single-family renters) expressing this view jumped 11%—from 57% in 2016 to 68% today. And although this increase takes place in all geographic areas, urban renters are increasingly likely to continue renting for financial reasons, Freddie Mac reported.
As part of the Renter Profile research, a companion survey conducted by GfK Custom Research found that cost concerns play a major role in mobility and housing choices.
This study shows a significant majority—64% of renters—cite price as the most important factor when considering their next home, a theme consistent across all three generations. Only 36% cited location as the most important factor in choosing a home.
In addition, the companion survey found that across the three generations, renters are more likely to perceive homeownership as less accessible than it was three years ago—40% of respondents shared that view.
A whopping 81% of renters anticipate it would be difficult for them to buy a home, as compared to 38% who believe renting a home is difficult. Plans to continue renting remain relatively constant, with a majority (55%) of renters indicating they plan to continue doing so.
The Freddie Mac survey found that a significant and growing majority of renters—a solid 66%—are satisfied with the overall rental experience, up from 60% in August of 2017.
Even among renters who have experienced a rent increase in the past two years, a growing number—64%—stated they do not plan to move, up from 49% in August of 2017. This includes a noteworthy 70% of Baby Boomers.
The findings are consistent with Freddie Mac’s 2016 study of the 55-plus population, which found 63% of Boomers prefer to age in place. In addition, a majority of renters–54%—continue to believe that renting is a good choice for them now, including 71% of Millennials.
In addition to Boomers and Gen-Xers, 31% of urban renters do not see homeownership in their future, up from 27% in August of 2017.
“Renter satisfaction remains high, but the continued shortage of supply and growing demand means more renters are looking at cost than ever before,” Brickman said.
“Although it’s clear that the demand for rental housing will continue for the foreseeable future, this survey is also a reminder of the important role Freddie Mac plays in financing low-income and workforce housing across the United States.”
For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.