Many Renters Plan to be Tenants for the Long-Term
More than 60 percent of current renters plan to rent long-term, according to a recent survey from Freddie Mac that says renters see both positives and negatives about their living arrangements.
Freddie Mac commissioned Harris Poll to survey more than 2,000 adults to get their perceptions about renting. The data provides significant insights for the single-family rental investor into the thoughts, plans and financial condition of their tenants.
“Many renters are not buying homes because of a perceived lack of ability to afford the down payment or mortgage and poor credit history,” said David Brickman, executive vice president of Freddie Mac Multifamily, “but there also is a segment of renters who simply do not want the responsibilities of owning a home.”
Here are some of the survey’s highlights:
The majority of renters surveyed cited six favorable factors about renting. (The percentage in parentheses shows the percentage that agreed or strongly agreed with each statement):
- Renting provides freedom from home maintenance responsibilities. Freedom from home maintenance. (78%)
- Renting allows you to have more flexibility over where you live. (68%)
- Renting provides protection against declines in home prices. (66%)
- Renting a home is less stressful than owning a home. (65%)
- Renting makes it more affordable to be closer to a major city and the “action” there. (57%)
- It costs less to rent a home than to own a home. (55%)
Investors should be aware that renters do have some negative perceptions about renting. The main one is that 80% of renters feel like they are subject to the whim of their landlord. The other is that renters feel like they are throwing their money away. Investors should be thinking about ways that they can reduce these negative perceptions by providing a stable and high-value living environment.
The survey said 38 percent of renters have extra money from each paycheck to spend on what they want, but 45 percent live paycheck to paycheck with just enough to get by, and 17 percent sometimes lack sufficient resources to pay for food and housing.
In comparison, homeowners tend to be more financially stable with 62% having extra money to spend from each paycheck on things besides basics, 31% living paycheck to paycheck and 7% struggling without sufficient resources for the basics.
Overall, 39% of all renters expect to purchase a home in the next three years, while 61% believe they will continue to rent. Younger renters are more likely than older renters to indicate they expect to purchase homes in the next three years.
For example, 47% of renters aged 25-34, and 58% of renters aged 35-44 said they will purchase a home in three years, compared to 27% for people 45-64 years old and 21% of those 65 or older.
Those who expect to continue renting beyond three years cite concerns about affording a down payment and the cost of monthly mortgage payments or poor credit history, but there is also a segment of renters who expect to continue renting simply because they don’t want the responsibilities of owning a home (39%).
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