Amid heightened concern for housing affordability and overall rental satisfaction, renting has become increasingly favored among some segments of the population in the United States. Among renters, 67 percent say they believe renting is currently more affordable than owning a home, and 66 percent say they are satisfied with their rental experience, according to research released by Freddie Mac Multifamily.
Freddie Mac Multifamily reported in its “Profile of Today’s Renter” that 55 percent of renters say they believe their next residence will be a rental, according to the survey.
The percentage of renters who say they have no interest in owning a home is also on the rise, climbing three percentage points up to 20 percent from Freddie Mac’s previous survey in August 2017 to its most recent survey conducted in February.
The preference is notably more pronounced among older generations. Just seven percent of millennials stated they had no interest in owning a home, while 19 percent of Generation X renters and 35 percent of baby boomer renters reported the same sentiment.
“Indeed, we are witnessing a historic shift in preference among older Americans, as they increasingly are choosing the size, convenience, and affordability that renting offers over ownership,” said David Brickman, EVP and Head of Freddie Mac Multifamily.
Suburban renters are the most likely to express a desire to own a home, with just 18 percent saying they have no desire, compared to 21 percent of both rural and urban renters.
The shift appears to be the result of a perceived decline in affordability.
“Perceptions of affordability and cost continue to play an outsized role in the choices of America’s renters, as they overwhelmingly see renting as more affordable and the right choice for them—right now,” Brickman said.
In all, 67 percent of renters who plan to continue renting cite financial reasons for their choice, an increase from 59 percent two years ago.
Millennial renters were the most likely to cite financial reasons as their reason to continue renting in the future, although financial concerns are on the rise among all three generations surveyed.
Seventy-four percent of millennials who plan to continue renting said financial reasons drove their decision, up from 59 percent in 2016. Sixty-five percent of Generation X renters who plan to continue renting will do so for financial reasons, up from 63 percent in 2016. Finally, 62 percent of baby boomers cited that rationale, up from 58 percent in 2016.
Renters in the West are feeling the effects of rising home prices and rent prices most acutely. Fifty-one percent of Western renters stated that owning a home has become more difficult over the past three years, compared with 43 percent in the Northeast, 36 percent in the South, and 27 percent in the Midwest.
Furthermore, 64 percent of those surveyed in the West say rent increases have caused them to spend less on other essentials, which is a full nine percentage points higher than in any other region, according to Freddie Mac’s research.
Despite these challenges, renters on the West Coast are more likely than those in other regions to remain in their current rental rather than move after experiencing an increase in rent, with 71 percent saying they will not move, compared with 63 percent in the Midwest, 58 percent in the South, and 67 percent in the Northeast.
Renters claim to be largely satisfied with their rental experience, according to the Freddie Mac data. The most recent survey found 66 percent of renters reporting satisfaction, up 6 percentage points from the previous survey in August 2017.
“Renter satisfaction remains high, but the continued shortage of supply and growing demand means more renters are looking at cost than ever before,” Brickman said.
In fact, in a companion survey from GfK Custom Research revealing mobility trends among renters, 64 percent of renters stated price was the most important factor for them when choosing their next home, significantly more than the 36 percent who said location was their top priority.