Current renters value homeownership and want to buy a home, but many say affordability and financial obstacles prevent them from buying, according to the 2016 Renter Survey conducted by the California Association of REALTORS® (C.A.R.).
Nearly half of renters (48 percent) plan to buy a home in the future. Ten percent say they plan to buy within a year.
Of the 28 percent of renters who don't plan to buy in the future, half said they can't afford to buy; 20 percent will not buy because they prefer to rent; 19 percent said they can't qualify for a mortgage; and 15 percent lack a down payment. Job uncertainty (9 percent), economic uncertainty (12 percent), and housing market uncertainty (6 percent) were among other reasons renters cited for not buying a home.
The survey shows homeownership remains important to renters. Nearly half (45 percent) rated homeownership 8 or higher in importance on a scale of 1-10, with 10 being extremely important. The average was 6.8. Nearly all renters (95 percent) see advantages to homeownership. The freedom to do what you want with your home, building equity, and having permanence and stability were the top benefits mentioned by renters.
"Homeownership also has tangible social benefits. Studies show homeowners are more active in their communities and report higher levels of self-esteem and happiness when compared to renters," said Karen Trolan, president of the Silicon Valley Association of REALTORS® (SILVAR). "Since homeowners do not move as frequently as renters, homeowners provide neighborhood stability. They are involved in community issues, help prevent crime and improve neighborhoods."
One of the surprising findings of this survey is more than one in four millennial renters said they plan to purchase a home that will accommodate their parents, and about one in five millennials indicated they plan to pool funds with family members to buy a home.
Primarily reflecting cultural values, Hispanic renters were more likely to buy a home that will accommodate their parents and/or adult children than any other ethnic group, with 46 percent indicating so, compared with 35 percent of blacks, 32 percent of Asians, and 29 percent of whites.
Forty-six percent of renters claimed they currently rent because they can't afford to buy, and 13 percent said they have poor credit and can't qualify for a loan. The remaining renters choose to rent because they like the flexibility, freedom and ease of renting, are concerned about the maintenance costs of owning a home, or are not interested or aren't ready to buy.
Two in three renters have made some kind of preparation to buy a home: 25 percent have searched for homes, 16 percent have searched online for information about the home buying process, and 12 percent have spoken to a REALTOR®.
"People who are planning to stay in a property over the long term will benefit from buying a home. Tax benefits may be a big help, plus a mortgage lasts 15 to 30 years; renting is forever," said Trolan.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.