Survey: Most Renters Delay Home Ownership, Citing High Prices, Mortgage Rates

The majority of renters (70.51 percent) saw a rent increase in the last year. This rise is linked to a red-hot housing market that drove home prices to a historic high in June, keeping many would-be buyers in the rental market for the short term.

Although renters are concerned about the high cost of rent, their attitudes toward home ownership remained largely unchanged from 2021 to 2022. This Rent. Survey asked U.S. renters about the change in their rent price between 2021 and 2022. It also inquired about their confidence in the housing market, their timeline for home ownership and where and when they’d like to move.

Most renters report rent hikes

Rent prices increased across the country in 2022, according to the monthly Rent. report, as residents of many major metropolitan areas and cities saw rent prices spike this year.

Survey respondents did, too. Of the 70.51 percent of renters who experienced a rent increase this year, most (33.73 percent) saw their rent go up between $100 and $500. Another 29.89 percent saw an increase of less than $100.

Rent price increases of more than $500 were less common. Just 4.92 percent of renters saw their rents increase by $500 to $1,000 last year, while 1.97 percent saw an increase of more than $1,000.

Renters are concerned about price increases

The rise in rent prices worried most of the renters surveyed — even the lucky 29.40 percent of respondents who didn’t report a rent increase this year. The majority of renters (86.32 percent) indicated that they were “concerned” or “extremely concerned” about rent prices. Just 4.04 percent of renters said they were “not concerned at all” or “not very concerned” about the cost of rent.

Between 44.15 percent and 60.35 percent of renters in each rate increase category were “extremely concerned” about their rent prices. That number was lowest in those who hadn’t seen a rent increase this year and highest in renters who had experienced a rent increase of between $100 and $500.

Confidence levels remain consistent

Even though renters were worried about rising rent prices, their home buying confidence didn’t change much between 2021 to 2022. The plurality (or the largest category) of renters rated their confidence level as neutral for the second year in a row. In 2022, 29.71 percent of respondents replied this way, 27.34 percent in 2021.

The number of “extremely confident” renters rose to 8.98 percent in 2022. That’s up from 7.70 percent in 2021. Respondents who indicated they were “not confident at all” dropped less than a percentage point from 16.88 percent in 2021 to 16.49 percent in 2022.

Around 15 percent of renters showed no interest in buying a home in both surveys. This category totaled 15.89 percent in 2022, up slightly from 15.10 percent in 2021.

Most renters opt to stay put – for now

Over half (55.16 percent) of renters said they were interested in moving. Interestingly, 48.57 percent said that events over the past year actually made them search for a new home more actively.

But even renters who are confident in their ability to purchase a home are delaying the purchase. Nearly 70 percent of renters said they would wait to buy a home. Many (38.86 percent) renters didn’t have any immediate plans to move at all. Another 29.68 percent indicated they planned to purchase a home between now and the end of 2023.

There was a negative correlation between the amount rent increased and the decision to wait longer to buy. More than three-quarters of renters who experienced increases less than $100 said they would wait to buy, while just over 60 percent of renters who experienced increases between $500 and $1,000 said they would wait. Renters who saw the largest increases were evenly split between buying and waiting. Renters who experienced no change or saw their rents decrease said they were waiting to buy at a rate just under 64 percent.

High home prices and interest rates top reasons to wait

Renters cited a number of reasons to delay home ownership. Most (69.10 percent) were worried about the fluctuating housing market, even respondents whose rents stayed the same this year.

Home prices are also an issue. Almost 60 percent, or a total of 59.11 percent of renters, said they were waiting to buy a home because prices were still too high.

They’re right to be concerned. The median price for a single-family home reached $413,500 during the second quarter of 2022, according to the National Association of Realtors’ (NAR) quarterly report. It was the first time that median home prices topped $400,000 and an increase 14.2 percent year-over-year.

The average median home price dipped to $384,800 in September 2022, indicating a cooling market. But that’s still up 8.4 percent over last year. And rising mortgage interest rates will eat up much of what buyers would save. So it makes sense that 20.65 percent of respondents said they were waiting for mortgage rates to stabilize before buying a home.

Housing inventory remains low, both because of a flurry of home buying activity and because people who bought homes at lower interest rates are staying in place. A long-term lack of affordable housing makes the inventory crunch even more extreme for low- income renters and buyers alike. Home inventory is still too low for 14.98 percent of survey respondents to consider buying in the near future.

Where renters want to move

The renters who want to move overwhelmingly want to stay close to their current home. The largest group (31.39 percent) want to stay in the same ZIP code, while 28.72 percent prefer to remain in the same city. Another 20.53 percent will consider a new home in the same state.

Just 5.33 percent of renters are interested in moving to a bordering state or a state in the same geographic region. Only 2.17 percent are willing to leave the U.S.

Renters like their options

Not everyone is interested in buying a home. Many renters (44.44 percent) are content to stay in place.

Of these respondents, 3.64 percent said they appreciated the flexibility of renting. Another 1.62 percent like the amenities their rental home offered.

The takeaway

Renters remain interested in home ownership. But historically high housing costs and rising mortgage rates have prompted most to remain in place, despite rent price hikes across the country.