Nearly 40% Of Renters Believe They'll Never Own A Home

The number of renters who believe they’ll never afford a home has skyrocketed in the last year as rates rose and stock shortages lifted home prices out of their late-2023 spiral.

A recent Redfin survey found that close to 38% of renters believe they are unlikely to become homeowners, up from 27% at the same time last year.

Lack of affordability is the most cited reason for their pessimism, with almost half of respondents saying houses are simply too expensive.

Trouble saving for down payments (35%), inability to afford mortgage payments (33%) and high mortgage rates (32%) accounted for the rest. Just 14% said they don’t want to own a home.

The combination of price appreciation and near-7% rates has created a tough market for prospective buyers. Median monthly payments are up 11% YOY, reaching a new all-time high of $2,747 in the four weeks ending April 7.

Coming into the spring homebuying season, buyer demand is at its highest point since last July, Redfin says, while inventory remains depleted, putting upward pressure on prices.

At the same time, March inflation data fell short of the Federal Reserve’s preferences, causing analysts to pare back their expectations for rate cuts in the coming months.

Goldman Sachs now predicts two rate cuts rather than three this year, while Bank of America and Deutsche Bank are betting on just one.

“For homebuyers, the latest CPI report means mortgage rates will stay higher for longer because it makes the Fed unlikely to cut interest rates in the next few months,” Redfin Economic Research Lead Chen Zhao noted.

“Housing costs are likely to continue going up for the near future, but persistently high mortgage rates and rising supply could cool home-price growth by the end of the year, taking some pressure off costs.”