Renters are caught in the housing market’s ultimate Catch-22: The cost of renting is rising, but they can’t afford to buy, either. In a word, they’re stuck. So a majority are choosing to defer the dream of homeownership, a Freddie Mac survey finds.
This is not a shocker.
Even though rents in many parts of the country are taking a bigger and bigger bite out of paychecks, about 70% of renters say that renting an apartment is still a lot more affordable than buying, according to the survey. And more than half say they will continue to make monthly payments to their landlords over the next three years.
“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,” says David Brickman, executive vice president of Freddie Mac Multifamily.
For those who make the big move to shell out for a home in the next three years, the biggest roadblock is coming up with the money for a down payment. That’s what 36% of respondents say, while 35% report that less-than-stellar credit is standing in their way. Not making enough money and having too much debt are also concerns.
Different generations have different reasons for preferring renting. Millennials like that renting allows them to stash more money in the bank while accommodating their lifestyles. Generation Xers and boomers say they don’t have to worry about the maintenance or responsibility of owning a home. Boomers also say renting is a better fit for their lifestyle.
And despite what can seem like a never-ending barrage of bank account–draining hikes, renters won’t be deterred.
“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 in a statement.