Indeed, the real estate market has increased since mortgage rates has been between 4-5% which caused many people to jump back into purchasing a home. However, the nation’s homeownership rate dropped to a record low in 2016 from a record high in 2004, and even as home sales improve, first-time buyers are still missing out on much of the recovery. Some renters are staying put by necessity and some by choice. The number of renters who said they don’t know when they expect to move rose to 37 percent in March compared with 30 percent in a survey conducted last September, according to a survey released this week by Freddie Mac, which helps finance the multifamily apartment market. Survey respondents who said they expect to move during the next two years fell to 33 percent from 38 percent since September. In addition, 55 percent of all respondents, and 60 percent of 35- to 49-year olds, said they like where they live and don’t plan to move even if their rents rise.
So why are more people choosing to rent rather than to buy a home? Well the majority of renters says that saving up for a downpayment deter them away from buying a home. With home prices hitting new peaks in many markets, a 20 percent down payment on a typical home costs more than two-thirds of about $56,000, the national median annual household income, according to Zillow. On average, the number of new rental households has increased by 770,000 annually since 2004, the center’s report said, making 2004-14 the strongest 10-year stretch of rental growth since the late 1980s.
Apart from the hangover from the housing collapse and the worst economic downturn since the 1930s, the nation’s changing demographics are also causing a major shift in housing trends. For instance, a majority of new households expected to be formed in coming years will consist of people with a minority background. Historically such Americans have had lower incomes and fewer assets and were less able to buy homes, according to the Urban Institute.
At the same time, millions of young adults who normally would be first-time home buyers are still struggling to find decent jobs; many are also putting off marriage and having children, a trigger for home buying. They are also more likely than previous generations to be saddled with heavy student loan payments that hurt their ability to save for a down payment.
But it is not just younger people who are having trouble owning a home. According to the Joint Center’s report, that rate dropped the fastest for people in their late 30s to early 50s. These people were in their prime home-buying years right before the recession; when housing prices plummeted, they were left with little or no equity.
The choice between buying a home and renting one is among the biggest financial decisions that many adults make. “People in their 40s and 50s were very hard hit by the housing crisis,” said Chris Herbert, managing director of Harvard’s housing center. “They’ve been a bit of a forgotten generation.” Some economists see signs of a turnaround, with reluctant renters like Mr. McDowell starting to find ways to enter the mortgage market, where interest rates are still at bargain levels. The economists predict home buying will continue to rise as long as the economy keeps growing and unemployment falls further, prodding employers to raise wages faster than inflation.