MCLEAN, Va.–Even with strong rent increases in many markets, 70% of renters currently feel renting is a more affordable choice than homeownership, according to a new survey from Freddie Mac.
The survey found that 55% plan to keep renting in the next three years. Even when looking across the generations, Freddie Mac said views are similar, with 70% of Millennials, 61% of Gen Xers and 73% of Baby Boomers thinking that renting is a more affordable choice for them.
"Renting is becoming a popular choice among many age groups," said David Brickman, executive vice president of Freddie Mac Multifamily, in a statement. "While most renters still have favorable views toward homeownership and aspire to it, many choose to rent because they view it as more affordable and a better fit for their lifestyle right now."
For the Freddie Mac quarterly online survey of renters conducted in January and February 2016, 46% said renting is a good choice for them now regardless of whether they plan to buy or believe they will be able to afford to do so. The perception is even more positive among Millennials, with 54% saying renting is a good choice for now.
Freddie Mac reported that similar to what it found in an October 2015 survey, renters of single-family homes are the most likely home buyer, with 52% stating they plan to purchase a home in the next three years, compared to 36% of apartment renters. A closer look shows that older Millennials age 25-34 are the group most likely to become homeowners (56%), followed by Gen Xers (49%), younger Millennials age 18-24 (44%) and Baby Boomers (31%).
Many renters who plan to buy in the next three years still indicate they have financial hurdles to overcome, which include:
- Affording a down payment (36%)
- Not a good enough credit history (35%)
- Not making enough money (30%)
- Carrying too much debt (23%)
Among the other findings in the Freddie Mac survey:
- The most popular reason for younger Millennials is that renting allows them to save money (42%), followed by it being their best option for their lifestyle and age (39%).
- Gen Xers’ top reason is that renting gives them freedom from home maintenance (28%), followed by not wanting the responsibilities of owning a home (24%).
- Close to four in ten Baby Boomers say they rent because they do not want to worry about home maintenance (41%), do not want the responsibilities of owning a home (37%) and renting is the best option for their lifestyle and age (37%).
Many renters also report that they do not intend to move even if their rent has increased.
"Almost half of all renters whose rent rose in the last two years say they like where they live and will stay regardless of rent increases," Brickman said.