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NextGen Magazine

 
 

Renters Increasingly Skeptical They Will Ever Own a Home

By:
Chris Gaetano
Published Date:
Jun 27, 2019
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Renting may turn out to be just a way of life for many tenants, as only a minority believe it extremely likely they will one day own a home of their own, according to the Wall Street Journal. A survey from Freddy Mac found that these optimists accounted for just 24 percent of participants, an 11 point drop from four years ago. Those who thought such an outcome to be "somewhat likely" was the largest group, at 37 percent, followed by those who felt it to be "not very likely" at 21 percent, and "not at all likely" at 18 percent. 

While some may rent out of preference, Freddy Mac found that many simply cannot afford to buy. It found that 80 percent of renters born between 1965 and 1980—Gen Xers—as well as 71 percent of baby boomers who rent, said they struggle to build enough savings to afford a down payment. Student debt was also a factor, as 51 percent of renters 23 to 29 years old said they made different housing choices due to their loans. In addition, the WSJ noted that home prices have outpaced incomes. 

A recent report from Harvard found that, even as the number of homeowners increases, prices have increased dramatically. The ratio of median home price to median household income rose from a low of 3.3 in 2011 to 4.1 in 2018, which the report said was a sign of deteriorating affordability. While there is geographic variation, the report still indicates that housing is costing more than most people can afford. In one out of seven metro areas, for example, home values are five times greater than incomes, while in one out of three metro areas, the ratio is just three times greater. It doesn't appear that this trend will reverse soon, as the study found that a large percentage of the new housing being built is for the high-end market, while the supply of smaller and more affordable homes has been limited. It's simply not profitable right now to build homes for the middle market, said the report.