Your Young Renter Employees Still Want to Buy
According to a new quarterly consumer survey released by the National Association of Realtors®, most younger renters still want to buy a home and continue to view homeownership as a big part of the American dream. Although only half of the surveyed households believe that the economy is currently recovering, a new financial index concluded that more people believe that their financial situation will be better next year than it is currently.
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NAR’s inaugural quarterly household survey, Housing Opportunities and Market Experience (HOME), tracks various real estate market trends, as well as the views of current homeowners and renters regarding owning a home, whether or not they believe it’s a good time to buy or sell, and what they think about the mortgage market and the process of getting a home loan.
According to NAR, “The HOME survey data reveals that an overwhelming majority of current renters who are 34 years of age or younger want to own a home in the future (94 percent). Overall, 83 percent of polled renters have a desire to own, and 77 percent believe homeownership is part of their American Dream. Lawrence Yun, NAR chief economist, says the survey’s findings debunk the notion that young adults aren’t interested in buying a home.”
“Despite entering the workforce during or immediately after the worst of the financial and housing crisis, the desire to become a homeowner appears to be a personal goal for a convincing majority of young renters,” he said. “Furthermore, there appears to be sizeable, pent-up demand for buying that currently remains untapped because of a variety of economic and personal reasons impacting many households.”
When renters were asked what their top two reasons were for not owning a home, the inability to afford led the way (53 percent) followed by the desire for a more flexible lifestyle of renting without being locked into a mortgage (19 percent). When asked what would be the most likely reason for them to own in the future, not surprisingly, it was the same two reasons resurfacing. A lifestyle change such as getting married, starting a family, or retiring (33 percent) was followed by an increase in their financial situation (26 percent).
“A combination of factors such as rising rents and home prices, limited supply, repaying student debt, and getting married and having children later in life has more to do with the currently underperforming share of first-time buyers than the idea that buying a home is not as desirable as it used to be,” adds Yun.”
Homeownership remains good financial decision, part of American Dream
Even with the economy’s recent crash clearly in the minds of most Americans, 84 percent of households within all surveyed age groups and education levels believe that owning a house is a good financial decision, with 85 percent of the same groups listing homeownership as a part of their personal American Dream. A place to raise a family (36 percent), a place to call their own (26 percent), and a place to retire (14 percent) were the most appealing reasons for homeownership.
Direction of home prices, financial outlook on the rise
In the past year, regarding home values across the country, 89 percent of homeowners report that home values in their areas have either stayed the same or risen. Not surprisingly, 91 percent said they expect home values to stay the same or increase over the next six months.
According to NAR, “The HOME survey also calculates a monthly Personal Financial Outlook Index3 measured by household type, age, income and type of location. Since tracking began in March, the index representing all households has slowly trended upward to its highest current reading in December – reflecting stronger confidence that respondents’ financial situation will be better in six months. Currently, renters, younger households and those living in urban areas are more optimistic about their future financial situation.”
“Young adults, who make up the majority of all renter households, are typically more optimistic about their future,” adds Yun. “As more of them settle down and begin plans to start a family, the allure of owning their own home as well as the long-term financial stability homeownership provides will drive their emergence into the housing market. However, the extent to how fast this occurs will greatly depend on more entry-level housing supply coming onto the market and needed improvements in affordability conditions.”