In a recent survey of renters who hope to someday buy a home, more than half expressed their desire to purchase sooner rather than later. According to a survey by the PulteGroup, 60% of renters surveyed say they hope to buy a home within the next two years (506 adults total were surveyed in March 2012 in an online survey). In other recent surveys, the number is often higher than that – with some tallies coming as high as 90%! No matter which surveys you look at, though, more renters are saying they want to buy now than they did in the past. That may come as a shock to some, especially when you consider that the housing market is crawling along at a snail’s pace and the U.S. economy as a whole still has a very uncertain future. So, what’s going through the minds of renters? Why settle down and buy a home NOW?
Economists say there are a variety of reasons. We’ll start with the two most obvious answers:
1. Home prices are still affordable, yet are on the rise. That means prospective buyers have confidence in the market. Simply put, if they buy now, they believe their investment will increase in value over time. Combine those prices with record-low mortgage rates, and you have a deal that’s too good to turn down!
2. Many homeowners lost their homes in recent years to foreclosure. Other prospective buyers were denied for loans, so more Americans were forced to rent. With the increase in demand, apartment complexes have consistently raised their rent prices over the last four years.
So, many renters have decided that instead of paying an increased rent for their apartment, they would rather put that money towards a monthly mortgage payment, and be able to call themselves a homeowner. If you’re going to spend the money every month, you might as well build some equity with it!
There’s also a slightly-less obvious reason – since the economy is slowly starting to show signs of recovery, consumer confidence in the housing market is starting to return also. But in addition to the obvious, economists say there’s an unexpected reason that renters want to buy right now.
About one-third of renters say they anticipate at least one adult child moving back home in the future. Remember, college graduates are having a difficult time finding work these days. So, after graduation, they need a place to live, and an apartment with Mom and Dad isn’t going to cut it! Nearly as many renters say they expect to take in an aging parent sooner rather than later. With the cost of nursing homes and assisted living beyond many recession-strapped budgets, it’s cheaper to have everyone under one roof. As a result, they need the extra space that homeownership can give them!
In fact, this has become such a big trend for Americans that economists say it could actually affect home construction down the line (for example, mother-in-law suites, split floorplans, additional bathrooms, and extra-large kitchens). So, with more renters growing tired of increasing rent payments, more families choosing to live together, and home prices still at an affordable rate, you can expect to see more renters attempt to purchase a home.
But, economists warn that any renter considering purchasing a home should take their time finding the perfect fit, and suggest they should begin saving now for a down payment.