Posted on 09/14/2014 10:35:20 AM PDT by 2ndDivisionVet
We’ve all heard that millenials are the key to the housing recovery and that home prices are set to skyrocket just as soon as all the people renting or living in family homes (read: basements) get out, get married, get employed, and settle down in their new homes. However, for some reason, the estimates for when all this will happen just keep moving farther and farther out. In an effort to determine just what is delaying renters from becoming homeowners, the New York Federal Reserve conducted a Survey of Consumer Expectations to address the issue. The study found that while most renters have a “desire to own,” a number of factors are preventing them from buying. Some of these factors are very real hurdles to homeownership, while others are literally all in the renters’ heads.
The biggest hurdle to buying a home for most renters is a very large, very real one. More than half (55.7 percent) say that they simply do not have enough money saved or that they are paying too much money out toward debts. 52.7 percent report that they do not make enough money to purchase a home, and 41.4 percent report that their credit is not good enough. Interestingly enough, however, many renters do not actually do any research before coming to these conclusions. About two-thirds of renters reported that they simply think it will be “somewhat or very difficult” for them to get a mortgage versus actually knowing this to be true[1]. Furthermore, many renters do not even check their credit to determine whether they have a viable score for buying but simply assume that they do not; more than a third (35 percent) “think that their credit score is below 680” rather than actually knowing this to be true. “They are convinced that they would not be granted credit and thus may fail to apply for a mortgage even after an easing in standards,” explained Fed researchers in their report. The researchers also added a caveat regarding lowering borrowing standards. “Relaxing credit standards may…have undesirable consequences down the road since borrowers with lower credit scores are at higher risk of default,” they wrote [2].
WHAT WE THINK: While we want to believe what so many rose-colored-glasses-wearing analysts are selling (namely that we can get back to a serious real estate boom before 2020), reports like this indicate that we are simply living in a new era for real estate in which appreciation is not fast and not guaranteed, in large part because an increasingly large portion of the population is opting out of homeownership and feeling okay with that decision. While the NY Fed did determine that most renters think buying a house would be a good investment, those renters’ perspectives on their own personal homeownership experience do not indicate that they will actually buy. As long as they keep renting, the face of the housing market is going to continue to change and the dream will be less and less universal because these individuals are going to raise families and socialize among friends who do not necessarily think homeownership is crucial to happiness, productivity, or professional success.
Do you rent or own? Wish you did something differently?
The generation replacing us boomers is not going to be as prosperous as we were.
Feminism caused dual incomes thus raising housing prices to that which only couples with dual incomes can afford. If there’s not a lot of married couples, there’s less home buying. There you have it in a nut shell.
we don't ever own anything in realestate when you think about it...the govt does.
While real estate is still a big problem, throwing your money into a hole in the ground (landlord) every month gets you nothing.
A home can be a great place to live, but it can also be an enormous burden that ain't worth the hassle and eliminates a lot of flexibility for the people living in it.
I will never own a home again. Had a nice one. My developer put in section 8 housing about 1 mile away. My property value dropped by 2/3s. I also took a huge economic hit at the same time.
Never again.
WW2 caused duel incomes, when mothers and wives went to work in the factories....
In some parts of the country there is a whole different factor at work, where seniors can't afford to stay in their homes because they can't pay the property taxes.
Rentals include the price of the property tax, so you are paying it anyway. When I rented, the property taxes went up, and the landlord increased my rent to cover it. No landlord is going to give away the cost of the property tax, they will include it in the rent.
First we have to stop living in denial about the definition of “ownership”. As long as we continue to fund government through perpetual property taxes the decline will continue. You can’t own reestate in the US, so you will never own your home. Homeowners are nothing but glorified renters.
I've gone through this exercise on FreeRepublic before. Check out the real estate listings in your town and find a home that you might consider buying. Sit down and figure out your monthly cost of owning the home. Then contact a realtor and see if there are any listings for rentals in the same neighborhood. Sit down and figure out the monthly cost of renting the same home. You'd be shocked at the difference between the two numbers.
It gets you a roof over your head and free repairs when something breaks. Also it frees you from any of that “maintenance” stuff. It’s all about priorities and what you want to do with your time and money.
I may be a glorified renter, but when I sell my property is worth twice more than what I paid for it. With that money, I can move to a place with lower property taxes, and pay for it in full with my equity. As a renter, you do not have that luxury.
If you have a job that is not stable, and you want mobility, then rent. if you have a family, with a stable job, and plan to live in the area for a long time, then buy.
I live in a desirable neighborhood. To rent would cost me at least $5000 a month.I only pay property tax now. I bought a modest home in a wealthy neighborhood, fixed it up, and my value has doubled.
I guess you’re right. That’s the long and short of it.
As long as those slackers pay their rent on time, I don’t really care. :)
Twice in my life we sold a house, took the gain, and moved to a bigger house in a better neighborhood.
Perhaps I should have given the money to the real owner
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