With rent prices climbing higher and higher these past years, does this make renters feel more skeptical about their housing choice? On the contrary, it seems that 78% of renters believe that renting is still more affordable than owning a home, according to a new survey by Freddie Mac. This is 11 points higher than in February 2018, when the same survey was conducted.
An interesting highlight of the survey was that renters across all generations consider that renting a home is more affordable. In fact, the number of people sharing this opinion went up considerably in the last 6 months with Millennials increasing by 14 points to 75%. They are followed by Gen Xers, up by 11 points (70%) and Baby Boomers, up by 8 points (81%). It is notable that such a high percentage of Baby Boomers are inclined toward renting, a fact backed up by other studies that show senior renters as the fastest growing renter segment.
The rising cost of renting affects spending on essentials
66% of renters reported encountering difficulties in paying their rent in the past two years, while only 43% of homeowners confessed facing similar situations. The rising rents affected the way renters spent their money on food, utilities, and other essentials (51%), savings (50%) and nonessential items (64%). This was even more striking in the rural parts of the country, with 77% of renters spending less money on essential items. On the other hand, in urban and suburban areas, only 59% of renters spent less money on such items.
The survey also showed that rising rents also affected those working in essential fields. 9 in 10 renters working in healthcare and education had difficulties paying the rent during the past two years. To put it into percentage points, 88% of them confessed struggling to afford rent. This is significantly more than the 65% of all other workforce renters and 61% of homeowners working in essential fields.
With location a major factor in housing costs, 48% of all renters having essential jobs found it difficult to rent an affordable home close to their place of employment. 39% of homeowners in the essential workforce shared the same opinion.
Fewer renters intend to buy a home in the near future
Renting is the best option for 63% of those surveyed. 58% of renters confessed that their housing choice is good for them at the moment and that they have no intention of buying a home in the near future (up from 54% in February). The number of renters not interested in buying has been on the increase in the last three years with 23% of them not planning to buy a home (up 3 points since February). Generation-wise, 42% of Baby Boomers have no intention of owning a home, the highest of all generations
When it comes to changing homes, 66% of the renters surveyed plan to continue renting their next home (up 11 points from February). Moreover, there’s been a decrease in the number of renters who are of the opinion that buying a home will be equally or more affordable in the following 12 months. Only 41% agree with this statement, down 5 points since February.
Source: Freddie Mac