Rents may be rising and consumers may be feeling the crunch when it comes to their personal finances, but 70 percent of renters still believe that renting is more affordable than owning a home and 55 percent of renters plan to continue renting for at least the next three years, according to a quarterly survey of online renters by Freddie Mac released on Wednesday.
Attitudes toward renting were similar across generations, according to the survey: 70 percent of millennials, 61 percent of generation xers, and nearly three-quarters (73 percent) of baby boomers surveyed said that they believed renting was more affordable than homeownership.
“Renting is becoming a popular choice among many age groups,” said David Brickman, EVP of Freddie Mac Multifamily. “While most renters still have favorable views toward homeownership and aspire to it, many choose to rent because they view it as more affordable and a better fit for their lifestyle right now.”
The perception of renting among millennials was more positive than that of overall respondents: 54 percent of millennials said they believe that renting is a good choice for them now, regardless of whether they can afford to buy later or whether they want to buy later. Overall, 46 percent of respondents said that renting was the best choice for them now.
The most likely future home buyer is the single-family home renter, according to Freddie Mac, with 52 percent of renters in single-family homes (compared to 36 percent of apartment renters) saying they plan to buy a home at some point in the next three years—consistent with the results from Freddie Mac’s October 2015 survey. Millennials ages 25 to 34 were the most likely age group to buy in the next three years, at 56 percent. Nearly half of generation xers (49 percent) said they intend to buy in the next three years, followed by millennials ages 18 to 24 (44 percent) and baby boomers (31 percent).
Affording a down payment was perceived to be the biggest hurdle among those who plan to buy a home in the next three years (36 percent), but credit history was a close second at 35 percent, according to Freddie Mac. Thirty percent of those who plan to buy in the next three years said they do not make enough money, and 23 percent said they had too much debt.
Lifestyle preferences, in addition to financial factors, influenced the decision to rent over buying. Among younger millennials, the most popular reason for renting was the fact that renting allows them to save money (42 percent), while 39 percent of them said renting was the best fit for their lifestyle. For gen-xers and baby boomers, the most popular reason was not having to worry about home maintenance (28 percent for boomers and 41 percent for gen-xers). Almost half of survey respondents whose rent had increased in the last two years said they liked where they live and they plan to continue renting regardless of rent increases, according to Brickman.
The most popular non-financial factor to consider when choosing a place to rent is safety and security (27 percent), according to the survey.
Click here to view the entire survey.