Affordability is Main Hurdle for Aspiring Home Buyers

NAR released a new Aspiring Home Buyers Profile that captures the consumer sentiment of the housing market for non-homeowners—defined as those that rent and those that live with someone else (such as family and friends) rent-free. The report is aptly named, for nearly nine in 10 non-homeowners expressed the desire to own a home of their own one day and eight in 10 stated that homeownership is part of their American Dream.

A third of all U.S. consumers households surveyed in 2016 were non-homeowners (34 percent), which is a sizable number of people who want to own a home but haven’t found a path to homeownership just yet. Of non-owners, 26 percent were renters and 11 percent were those living with someone else without paying rent. The typical non-owner is under 34 years of age (59 percent), has an income of less than $50,000 (64 percent), and lives in suburban areas (43 percent).

Non-owners reported that affordability of homes was the number one reason they do not currently own. Last year, about half of non-owners said that they could not afford to buy (48 to 57 percent each quarter). Around a fifth of non-owners said they wanted the flexibility of renting rather than owning (18 to 22 percent each quarter), and small fraction did not want the responsibility of owning (nine to 12 percent each quarter).

Non-owners could benefit from increased education on downpayment assistance. In the third quarter of 2016, survey respondents were asked questions related to downpayments. Of the non-owners, 39 percent believe they need more than 20 percent for a downpayment and 87 percent believe they need more than 10 percent.

Throughout 2016, non-owners view that now is a good time to buy a home decreased over time. In the first quarter of the year, 63 percent of non-owners said that now was a good time to buy a home compared to 55 percent of non-owners in the last quarter of the year.