Although only half of surveyed households believe the economy is currently improving, nearly all young renters eventually want to buy a home, and a convincing majority still view homeownership as part of their American dream, according to a new quarterly consumer survey released today by the National Association of Realtors (NAR).
Additionally, a newly-introduced index tracking the financial outlook of households found that compared to earlier this year an increasing share believes their personal financial situation will improve in the months ahead.
NAR’s inaugural quarterly household survey, Housing Opportunities and Market Experience (HOME), tracks topical real estate trends, including current renters and homeowners’ views and aspirations regarding homeownership, whether or not it’s a good time to buy or sell a home and expectations and experiences in the mortgage market. New questions may be added to the survey each quarter to reflect timely topics impacting real estate.
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%). Overall, 83% of polled renters have a desire to own, and 77% believe homeownership is part of their American dream
“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,” said Lawrence Yun, NAR chief economist. “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.”
The top two reasons given by renters for not currently owning was the inability to afford to buy (53%) and needing the flexibility of renting rather than owning (19%). When asked what would likely be the main reason for buying in the future, renters cited lifestyle considerations such as getting married, starting a family or retiring (33%) and an improvement in their financial situation (26%).
“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,” said Yun.
Among all households (renters and homeowners) in the survey, the results highlight a split between those who agree the U.S. economy is on the right track and those who disagree. Only half of respondents believe the economy is currently improving, and 44% think the economy is actually in a recession.
“The promising stretch of job creation in several parts of the country in recent years has the housing market in 2015 on track for its best year of sales since the downturn,” said Yun. “However, that only half of surveyed households believe the economy is improving can be attributed to the fact that some areas have been slow to recover and wages have yet to grow in a meaningful way for far too many families.”
Despite uncertainty about the economy’s current performance, at least 84% of all households within all surveyed age groups and education levels believe owning a home is a good financial decision. When asked if they believe this strongly or moderately, 76% who believe it’s a good decision feel strongly about it.
NAR’s survey found that more homeowners (82%) than renters (68%) during the polling period believe that it’s a good time to buy a home. Furthermore, of those who thought it was a good time to buy, 64% felt strongly about buying. Among current owners, 61% believe it is a good time to sell a home, of which 53% felt strongly that it was a good time to sell.
The HOME survey also calculates a monthly Personal Financial Outlook Index 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,” said 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.”
For more information, visit realtor.org.