Which is More Affordable: Renting or Homeownership?
Despite rent increases and feeling burdened by finances, seven in ten renters currently feel renting is a more affordable choice than homeownership. Even among those who plan to move towards homeownership, half still see renting as a more affordable option.
These views are similar across the generations: 70% of Millennials, 61% of Gen Xers, and 73% of Baby Boomers think that renting is a more affordable choice.
Survey Says . . .
Freddie Mac commissions Harris Poll to survey U.S. adults online each quarter to get their perceptions about renting. The most recent survey was completed in January and February 2016 among 4,063 of which 1,527 were renters. Age, sex, race/ethnicity, education, region and household income were weighted to bring them into line with their actual proportions in the population.
Affordability is the #1 Reason for Renting
Ability to manage debt is less positive this quarter with more renters admitting occasional difficulties. Similar to what was seen in the October 2015 survey, single family renters are the most likely home buyers, with 52% stating they plan to purchase a home in the next three years, compared to multifamily renters (36%).
Many renters who plan to buy a home in three years still show financial hurdles to overcome:
- Affording a down payment (36%)
- Not a good enough credit history (35%)
- Not making enough money (30%)
- Carrying too much debt (23%)
Renting is More than a Financial Decision
For those who plan to buy, their reasons for renting now, instead of buying a home, are mostly financial. But many also cite:
- Allows me to save money (27%)
- Best option for my lifestyle and/or age (18%)
- Do not want to worry about home maintenance and repairs (15%)
- Need flexibility and mobility (13%)
Aside from Cost, Safety is Key When Choosing a Rental
Almost half of all renters whose rent payments rose in the last three years say they like where they live and will stay regardless of rent increases. Aside from cost and affordability, there are many factors associated with choosing a rental property. Among all age groups, these include:
- Safety and security (27%)
- Convenient location (19%)
- Size (13%)
- Privacy (12%)
- Pet friendliness (12%)