1/3 of Renters Not Confident in Ability to Purchase a House [Survey]

The pandemic had a wide-reaching effect on nearly every aspect of life. But this was particularly true in housing. Home prices shot up as competition increased. While a boon to sellers and high-end buyers, renters hoping to move on up were left with shattered or delayed dreams.

Across the country, renters put off goals to buy homes or move to other cities as the reality of homeownership, for the time being at least, became harder to envision.

According to a June 2021 Rent. survey of about 3,000 renters nationwide, 35 percent aren’t confident in their ability to ever buy a home. Of these, over three quarters cited a financial circumstance — homes costing too much or inability to afford a down payment — as their reason for pessimism.

On the flip side, almost half of current home sellers decided now is the time to sell because of the high profits reported across the real estate market. But of those, just 55 percent plan to buy a replacement property as their next housing situation.

The dream of owning a home is becoming less realistic for renters

The American dream of homeownership is becoming less realistic for many in the wake of the pandemic. Already difficult financial situations exacerbated as unemployment rose and the economy suffered. Job losses, health expenses, hits to retirement savings and overall uncertainty led many renters to re-evaluate their next housing move.

Overall, 34 percent of renters stated they were either “not very confident” or had “no confidence at all” they would ever be able to buy a home. And an additional 34 percent were neutrally unsure they would ever become homeowners. That’s nearly 7 in 10 Americans who at least doubt ever owning their own home.

Is that partially a result of the pandemic? The responses say yes. When asked how confident they were at the start of 2020, replies were more positive. Only a quarter of renters had little to no confidence in becoming homeowners before the pandemic hit. As well, the number of renters who indicated they were very or extremely confident they would own a home was 7 percent higher before the crisis.

While the numbers are staggering overall, breaking down a few key demographics tells a deeper story of uncertainty.

Baby boomer renters are least confident in their ability to buy a house

News stories abound about millennials killing the real estate market with delayed families and increased geographic mobility. Add to that Gen Y’ers and zoomers piling up college debt, unable to find meaningful employment in chosen careers and moving back in with mom and dad, one would expect younger renters to have fewer dreams of owning homes.

But that is not necessarily the case. Younger renters have lived most of their lives in this unstable economy and see a long future. Older renters – a subset already unique for not owning homes and coming to the end of 40-year mortgages like many of their peers – are the age group with the most doubt of owning a home again.

In fact, the older the renter, the less confident the dream of homeownership becomes. Perhaps it’s less time to replenish savings or an inability to switch careers in an ever-changing job market. And the numbers have seen a staggering increase as the pandemic wanes.

In post-pandemic polling, just 27 percent of renters under 30 have little or no confidence in ever owning a home. That number goes up to 32 percent for renters 30-44 and 39 percent 45-60.

But for renters over 60, that leaps to 60 percent. The pandemic certainly intensified doubt. That lack of confidence for older renters increased a full 16 percent since March 2020, when they carried a still-high 44 percent lack of confidence.

Nearly 35 percent of renters earning $200k or more are not confident in their ability to buy a house

It would also be expected renters earning the least would have the least confidence in ever owning a home. That, in fact, is true. For households making under $50,000, well over a third polled post-pandemic believe they are highly unlikely to ever own a home.

But the pandemic didn’t much move the already-low needle among that income bracket. Looking back to March 2020, only 5 percent fewer of those making under $50k held homeownership dreams. In comparison, in every bracket above them, confidence in homeownership dropped between 11 percent and 13 percent over the same period.

The most surprising takeaway is the homeownership confidence level among the wealthiest. Twenty-two percent of renters making over $200,000 reported they were “not very confident” or had “no confidence at all” in ever owning a home. Why? It’s likely high-income renters are looking to own in more expensive markets or at properties more aligned with their where earning $200,000 isn’t enough to afford home prices far over average.

Nearly 40 percent of renters hope to buy in the next 2 years, but many are delaying their decision

However, even amongst those who haven’t essentially abandoned dreams of homeownership, the pandemic certainly affected purchasing plans.

Of all renters, 9 percent still carry plans of buying a home before the end of 2021. More significantly though, nearly 30 percent of renters expect to purchase a home in 2022. That’s almost 4 in 10 renters targeting a home purchase within the next year and a half. Many are assuming prices will trend downwards now that the pandemic has lifted and the economy stabilizes.

But what of those renters who had planned on buying a home in 2020 before the world hit pause? A significant 83 percent reported waiting longer to make their purchase. Nearly half of responders stated that homes are just too expensive right now as their primary reason for delaying.

The second most cited reason? Employment change. That can most certainly be blamed on the pandemic economy.

More than 50 percent of renters have no immediate plans to buy

So is the homeowning dream dead? Probably not. But for over half of all renters in the US, making out that rent check every month is going to continue for a while. When asked if they had plans to buy a home “in the near future,” 56 percent of renters indicated they were not.

When it comes to why it’s simply a matter of money. The top three responses were economically based. Almost half were unwilling to pay current prices. And another quarter of responders reported being unable to save enough for a down payment.

The pressure of the housing market factors in too — 17 percent of renters cited it when asked why they are delaying a home purchase. This indicates these renters originally had plans to purchase a home before the end of 2022, but the pandemic put those ideas on long-term hold.

Nearly 50 percent of homeowners say high-profit margins are the primary reason to sell right now

While confidence is down among renters, the pandemic-driven hot hot hot real estate market has been a windfall for homeowners selling right now. According to a recent Redfin study, nearly half — 46 percent of all those actively selling reports putting their homes on the market now because of elevated values. And the numbers both in sale prices and selling speed confirm the booming market.

Home prices year to year is up over a quarter from the start of the pandemic. As of May 2021, the national median home sale price sat at a record high of $377,200. A big driver is demand. There are more buyers than sellers, and the number of homes for sale hit a record low, down 27 percent from last year. Another result of the heated market is how quickly homes are selling — it is at a record pace of just 16 days on the market on average.

All said, 54 percent of homes sold above asking price, another record, 26 percent higher than last year. On average, homes are selling for 2.2 percent above the list price.

While this phenomenon is widespread in almost every market, some cities have seen through-the-roof numbers. In Austin, home prices have risen a ridiculous 42 percent. The median sale price here is now at $600,000.

And it’s not just certain categories or sizes either. In many cities, exploding prices are market-wide. An incredible 84 percent of homes in Oakland have sold above the asking price. San Jose was right behind at 83. Further east, Rochester, NY has seen sales above list price in over 77 percent of purchases.

Looking to sell quickly? Homes in Indianapolis and Oklahoma City have been selling after a median of just four days on the market. And it’s typically only five days in Denver and the Chicago suburb of Elgin, IL.

Only half of those sellers plan to buy again immediately

But here’s where these two worlds intersect. While home sellers are cashing in on high market prices and demand, almost half of them aren’t moving right into a new home. Sellers are wary to spend all that money they made selling over the market price on turning around and buying a new home over market price.

All told, 45 percent of sellers are not buying a new house as their next housing choice. Twenty percent are moving into a temporary rental (until sale prices fall again), 10 percent have switched to renting long term and 15 percent are consolidating by moving in with another person.

Among those choosing not to buy again right away, the reasons why are diverse. Over a quarter reported moving in with a significant other post-pandemic. Downsizing was the intention for 17 percent of respondents. 16 percent said the expense of the current market and unwillingness to commit to a neighborhood made a difference to them.

It’s no stretch to understand why sellers wouldn’t want to re-enter the housing market and bidding wars straightaway. Temporary renters who just sold their homes want to stay as far away from the craziness as possible. Stories of home purchasers going to extremes in order to secure new properties they have their eyes on are everywhere.

To get the edge on in-demand properties, buyers are trying every tactic. Bidders have been offering tens of thousands over asking price, bribing competitive bidders to walk away, throwing in vacations and season tickets, paying in all cash (or even crypto) and even literally buying the seller’s next home for them.

Renters who recently sold say new home prices prevented them from buying again

While these statistics give a current snapshot from sellers with homes currently on the market, those who have already recently sold offer a slightly different point of view.

What are recent sellers who did not buy a new home right away reporting as to why? For them, the answer is mostly money. Over a quarter of respondents noted current home prices being too high as the main reason for not immediately buying a replacement home. Another 24 percent abandoned the idea completely, stating they are no longer interested in homeownership.

Housing survey methodology

The information presented in this survey comes from a Rent. survey conducted in June 2021.

A total of 2,800 people participated in the survey. The largest group of survey-takers (33.2 percent) was 45-60 years old. The smallest group (19.3 percent) was over 60. Another 25.0 percent were in the 18-29 age bracket, while 21.9 percent were aged 30-44. Less than 1 percent did not provide an age.

Our respondents were roughly half male and half female. Slightly more than half (51.9 percent) were female and 47.5 percent were male. Less than 1 percent did not provide a gender.

Survey results are subject to response biases because they are self-reported.

Fair use statement

This survey records home-buying confidence for renters and sentiments from owners who recently sold or plan to sell. All graphics and content are available for non-commercial reuse. Please link to this page and credit the survey in all citations.