Once a nation of homeowners, Americans are now increasingly in favour of rentals. A new survey from Freddie Mac, reveals that the US property market is leaning even further towards renting rather than owning a home. And the trend covers all the generations – from Millennials to Baby Boomers. Rentals are more popular than ever before.
The latest Freddie Mac ‘Profile of Today’s Renter’, a bi-annual publication released in early April, highlights the interesting rental trends. Rising house prices in the US property market and lack of supply means the overwhelming majority of renters find it is more affordable to rent than buy. And financial reasons mean that over two-thirds will continue to rent.
Renting more affordable than buying US property
One of the main characteristics of the US property market over the last six years has been rising prices. In some states, houses have done nothing but increase in value. Florida is a case in point. In February, property in the Sunshine State registered its 74th monthly rise in a row. As a result, affordability has become a key issue among potential home buyers.
In the latest Freddie Mac survey, 67% of renters claim that staying put in their rental home is more affordable than buying one. This is an increase of 8% on the survey carried out in September 2016.
Among the different generations, the increases are even higher. 74% of Baby Boomers (Americans aged 53 to 71) say they find renting a better option than buying. An increase of 59% from 18 months ago. This generation has traditionally been largely made up of homeowners. But the survey reveals a marked change in trends as more and more Baby Boomers sell their family homes on retirement to downsize.
Furthermore, 50% of this generation interviewed for the survey say they have no intention of buying in the future. This represents an 8% rise in six months. It has big implications for the US property market, particularly for buy-to-let homes catering for this age sector.
Financial reasons main motivation to rent
Across the board, finance dominates as the main motivation to rent. The statement “renting is a good choice for me now – I can’t afford to buy a house but would like to at some point” was the most ticked option for all generations. Among Millennials (those aged 21 to 37), half of those interviewed agreed with the statement, up from 41% two years ago.
Baby Boomers also cited financial reasons for their choice to rent rather than buy. 26% ticked this option compared to 21% two years ago.
No interest in owning a home
The choice to rent appears to dominate the US property market judging from the section in the survey asking about Americans’ interest in owning a home. Once an essential part of the American dream, home ownership seems increasingly less important.
Almost a fifth of Generation X (aged between 38 and 52) have no interest in owning a home, up from less than a tenth two years ago. Among Baby Boomers, figures are even higher. A full 35% stated that buying their own home is of no interest to them compared to 23% two years ago.
(Source: Freddie Mac)