A Message from President Mike Theo: Moving to Ownership

 Mike Theo  |    February 04, 2016

I’ve been reading and writing a lot lately about our post-recession markets, looking at both the demand side — articles on attracting talent to the real estate profession, labor markets and the needs/wants of Millennials, and also the supply side — which are articles about new construction and inventories. One thing for sure: a lot of the new construction I read about and witness first-hand is rental housing. As REALTORS®, we’ve always been interested in homeownership rates and fascinated with exploring the motivators that move renters from apartment living to owning a home. The National Association of REALTORS®’ research department has been equally interested and recently released some data to shed light into what renters are thinking as they contemplate moving to homeownership.

NAR’s new Housing Opportunity and Market Experience (HOME) report was created to track consumer opinions about the housing market. The December 2015 report included renters’ thoughts about homeownership. Here’s some of what NAR found.

To begin with, the American Dream of homeownership seems to be alive and well in America, regardless of whether respondents were renters or owners. A whopping 88 percent of all U.S. households thought owning a home was a good financial decision, and this was true for respondents of any age, ethnicity or level of education. 

A similarly whopping 87 percent of households believe homeownership is part of the “American Dream,” despite the fact that 44 percent of households still believe the economy is in a recession. The respondents’ reasoning is instructive because they believe:

  • The American Dream is best for their family (35 percent).
  • The Dream is best for building a nest egg for retirement (13 percent).
  • The Dream is best for immediate financial security (8 percent).
  • The Dream is best for being part of a community (8 percent).
  • The Dream is best for settling down (4 percent).

NAR’s research also found renters want to be homeowners: 83 percent of renters say they want to own a home in the future. In fact, 94 percent of renters 34 years old or younger aspire to be homeowners. And that aspiration is personal, with 77 percent of renters saying homeownership is part of their American Dream; this holds true whether they’re optimistic or pessimistic about the economy as a whole. Fifty-seven percent of renters think the economy is improving, and 82 percent of them want to own a home in the future. Forty-three percent of renters think the economy is not improving, and 76 percent of them want to own a home in the future. 

So, what’s stopping these renters from buying a home? Fifty-three percent say they can’t afford to buy. Nineteen percent say they currently need flexibility for jobs or other reasons. Eleven percent said they simply don’t want the responsibility right now, and they’re also concerned about getting financing to purchase a home. Sixty-five percent of renters think it would be very or somewhat difficult to obtain a mortgage, despite the fact that only 5 percent of them have recently tried and failed.

When asked what would cause them to move from renting to owning, 33 percent said a lifestyle change like getting married, starting a family or retiring. Twenty-six percent said improvement in their financial position. Thirteen percent said a desire to stay put in one location.

So what are we to make of all of this? I’m comforted knowing that renters today sound an awful lot like renters in the past — that despite the rocky economic road of the past decade, the vast majority of those who occupy apartments today still want to own a home tomorrow. I’m also feeling a bit more comforted that the American Dream seems alive and well.

(HOME survey data was conducted by the research firm TechnoMetrica Market Intelligence based on 9,034 completed telephone interviews with qualified households in December 2015, with a margin of error of +/- 3.3% and a 95% confidence level.)

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