A recent August survey by Freddie Mac found 3 in 4 renters (76%) now believe renting is more affordable than owning a home, up from 68% in March. The survey also reported that 63% of young Millennials ages 21-27 said renting fits their current lifestyle.
ValueInsured through its Modern Homebuyer Survey has been asking similar questions quarterly to gauge desire and preference in buying versus renting. While the desire to own a home remains high among all Americans, including Mllennials, ValueInsured’s researchers have noticed a similar drop in positive attitudes toward buying.
- In ValueInsured’s summer survey, roughly 8 in 10 Millennials (78%) continue to say they want to buy a home. This level of homeownership desire has remained largely unchanged from quarter to quarter in the past 18 months. In the latest survey, 78% of Millennials also said owning a home is an important part of their American Dream.
However, attitudes regarding the merit and financial benefits of owning seem to have soured since the beginning of 2016:
- 66% of Millennials now believe buying a home is a secure and smart financial investment, down 7 percentage points in 18 months.
- 73% now believe buying a home is one of the best financial decisions they can make for themselves and their family, also down 7 points. Among Millennial renters, the drop is more pronounced, at 9 points.
ValueInsured cannot draw a direct casual effect on Millennials’ declining attitude toward owning, however, it coincides with steady rises in national home prices and Millennials’ rising concerns for home prices and affordability in its quarterly survey:
- Among Millennials who want to buy a home in the near future, now only 1 in 3 (34%) believe they can afford a down payment on a home they would want to buy, down 13 points from 47%.
- 36% now believe the housing market is heading to a good direction for “people like me”, down 6 points in past 18 months.
During this same period, Millennials also expressed weaker confidence in the health of the housing market, despite rising home prices:
- Only 46% are confident a housing crisis similar to 2008 will not happen again in their lifetime, down 15 percentage points in the past 18 months.
- 43% are confident that a home they buy today would be worth the same or more by the end of next year, down 16 percentage points.
Finally, to echo Freddie Mac’s survey, 71% of all Millennials believe if home prices continue to rise, more Americans who want to buy a home would decide to stay renting instead. It is however important to remind ourselves that this is not doom and gloom. The most important takeaway is: Millennials still want to become homeowners. Their level of desire to buy has not declined. It is hard to insist that their perceived financial merits in buying should also stay unwavering, when the home price trajectory has been down-right scary to even veteran homebuyers, let alone a twenty- or –thirty-something who is just paying off their student loan debts and considering buying their first home.