Likelihood of Buying vs. Renting a Home Decreases by Income: What Are the Most Common Reasons People Rent?
Buying a home used to be an American rite of passage — now it’s not quite as common, largely because it’s become prohibitively expensive. In 1960, approximately 68 out of 100 Americans could afford to own a home — today, just 43 out of 100 can afford one, according to U.S. Census Bureau data explored by The Zebra.
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Not being able to comfortably afford homeownership is the primary reason people rent instead of buy homes, but what are some more specific reasons?
Recently released research and analysis from the Federal Reserve, the “Economic Well-Being of U.S. Households in 2022” report, shed light on common reasons why people rent homes instead of own them. Many, but not all, reasons are rooted in financial circumstances.
Can’t Afford a Down Payment
According to the Fed’s research, in 2022, 65% of Americans rented instead of owned because they couldn’t afford a down payment on a home. This figure was up from 62% in 2019. However, conflicting survey data from TheMortgageReports.com found that 39% of potential home buyers could not make a down payment of at least 5% in 2022.
More Convenient or Flexible To Rent
In 2022, 56% of Americans found it more convenient or flexible to rent rather than own. This is up from 52% in 2019. It’s a definite perk that voluntary renters frequently praise.
Can’t Afford a Monthly Mortgage Payment
A monthly mortgage payment can be more than rent, particularly when you factor in the additional onus of property taxes and home insurance. Forty-four percent of renters rent for this reason. Data on this percentage for 2019 is not available in the Fed’s report.
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Cheaper To Rent
Renting can be cheaper than owning — but not always. Still, 44% percent of Americans rent because they think it’s cheaper than owning. Interestingly, this number is way down from 2019, when 55% of Americans rented for this reason.
Renting Is Less Financially Risky
Perhaps because of the serious fiscal commitment that home ownership suggests, 42% of Americans opt to rent instead of own their home. This number is also down from 2019, when 50% of Americans cited this as their reason to rent.
Can’t Qualify for a Home Mortgage
Many Americans simply lack the financial standing to get a lender to consider them for a mortgage loan. According to the Fed’s research, 40% of Americans rent under this reasoning. In 2019, 41% cited these circumstances for renting.
Prefer To Rent
Some people (36%) simply prefer to rent rather than own. No data for this reason is available for 2019 in the Fed analysis.
Trying To Buy
With all of the above having been said, droves of Americans are still attempting to buy a home (though fewer than before): 32% in 2022 versus 35% in 2019.
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This article originally appeared on GOBankingRates.com: Likelihood of Buying vs. Renting a Home Decreases by Income: What Are the Most Common Reasons People Rent?
