For many, the American Dream includes homeownership, yet according to the U.S. Census Bureau, almost 40% of people in the United States continue to rent. Intrigued, KW Researchers sought to understand why renters are not buying. This study explores homeownership desires and hesitations among renters, while assessing their knowledge of the home-purchasing process. KW Research surveyed a random sample of 1,471 renters in the United States. Demographically, the survey respondents were primarily female (61%). The group was fairly well educated with more than half (54%) having completed some college or earning a bachelor’s degree. Over half of the respondents made more than $35,000 annually. One-third lived in a single-family home, while more than half lived in an apartment or condo.
Despite nationwide dips in homeownership, a majority of renters are still interested.
Despite U.S. homeownership being at a 50-year low*, an overwhelming amount of respondents (81%) expressed interest in homeownership, with nearly 50% being “very or extremely interested.” Among those interested, over half (57%) indicated they would like to be homeowners within the next three years.
Previous homeowners who have become renters have largely given up on the dream of homeownership. Over one-third of the respondents were previous homeowners. And, while 39% expressed interest in getting back into the market, the remainder—60%—said they had no intentions of reentering. Reasons for their decision to continue renting were largely personal, including retirement, divorce, financial strain, and relocation.
A majority of renters are taking financial initiative to own a home. When we asked about hurdles to homeownership, we found that 63% of respondents had hesitations about homeownership and financial concerns represented the biggest hurdle. However, on a positive note, we saw that a majority of renters (67%) are proactively working on their finances to be able to purchase a home either by trying to improve their credit score (38%) or by saving money for a down payment (29%).
Debt isn’t discouraging renters. Among the 77% of renters who indicated they had some form of debt, nearly half did not believe this debt was preventing them from owning a home. The most prevalent form of debt for renters was credit card or revolving debt, followed by debt accrued by student loans. There was also a perception among renters that credit card debt was more problematic than student loans.
Proactive home search remains low, despite high levels of interest in homeownership. As seen earlier, there are high levels of interest in homeownership among renters. Yet, even with this strong desire, the majority of renters said they seldom look at houses (online or in person). Over 25% of renters said that they do not look or have never looked at a house for sale.
Significant knowledge gaps exist when it comes to the homeownership process. When we asked renters what they thought the expected down payment on a mortgage was, answers varied. 60% of the renters believed the expected down payment was less than 10%, while 24% of respondents believed that the expected down payment should be 20%. This points to significant knowledge gaps in the homeownership process, largely due to a lack of education. 41% of renters said they have never educated themselves on the homeownership process.