Rising Rents Not Motivating Consumers to Buy Homes,
home-keyNew Freddie Mac research reveals that despite rising rents, the majority of renters are not motivated to purchase a home and positive perceptions about renting are increasing. Harris Poll was selected by Freddie Mac to conduct the survey of more than 2,000 U.S. adults online in March 2015 to get their renting viewpoints.
“We’ve found that rising rents do not appear to be playing a significant role in motivating renters to buy a home,” said David Brickman, EVP of Freddie Mac Multifamily. “This contradicts what some in the housing market think as they expect more renters ought to be actively looking to purchase a home. We believe rising rents are primarily a sign of increased demand rather than a signal that home purchases will be increasing.”
According to the U.S. Census Bureau, more than one-third of U.S. households are renting homes, and renters make up all net household growth over the last several years.
This year, rents are expected to rise 3.4 percent above inflation, a slight decrease from last years’ number of 3.6, according to the research. Only six percent of renters who have lived in their home longer than two years have experienced a decrease in their rent amount, while 38 percent of renters experienced an increase in their rent amount in the last two years.
Of the renters who experienced an increase in rent, 70 percent noted that they want to buy a home but cannot afford it right now, the data found. Fifty-one percent said that they would have to put off their plans to buy a home for now. Another 44 percent said that they would like to buy and are looking for a home to purchase.
“Growth in the number of renter households is occurring amid an improving job market and economy,” Brickman said. “The demand for rental housing is increasing and an estimated 440,000 new apartment units are needed each year to keep up with demand.”
A third of renters indicated in the survey that they are very satisfied with their rental experience and 30 percent say they are moderately satisfied. The main reasons selected for those that are satisfied with their renting experience are freedom from home maintenance, more flexibility over where you live, and protection against declines in home prices. These choices were the same in the last survey, with the numbers rising slightly. In spite of rent increases, 53 percent say they will not adjust their spending habits and 46 percent say they like where they live and will stay in their current place.