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Aug 19
2010
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A Bunch of Today's Renters Won't Ever Buy Homes ... Well, No Kidding
Posted by: Michael Cunningham on Aug 19, 2010 10:33 |
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Yesterday, there was lots of media coverage highlighting results of a survey that indicates quite a few of today's renters don't expect to ever become home buyers. Specifically, a Harris Interactive poll of about 2,000 folks conducted for real estate search site Trulia.com found that 27 percent of current renters don't anticipate that they'll eventually make the leap to home purchase.
Looking a little more closely at the survey info provided on Trulia's website, only 663 of the 2,000 people surveyed actually are renters, and there's no info provided on what type of housing (apartments, single-family homes, or something else) the renters are leasing. That seems like a pretty small sample to use when making broad-brush statements about a large and diverse group of renters, but let's go ahead and assume that the survey results are accurate. Do they, in fact, mean anything?
The Census Bureau reports that 66.9 percent of American households are homeowners, meaning that 33.1 percent rent. If 27 percent of those renters don't expect to buy at some point, the total pool of all households excluded forever from purchase is just 9 percent.
Throwing some more numbers out there for you to think about (go on, whip out your iPad for a calc-a-long), today's median home price across the country is $176,900, according to the National Association of Realtors. Assuming you're really old fashioned and will only buy a home that costs three times your annual income, you'll need to make about $59,000 to afford the typical home. The latest version of the Census Bureau's American Community Survey shows that incomes are below $50,000 for 48 percent of U.S. households. Furthermore, 23 percent of all households have incomes below $25,000, too low to afford not only the median-priced single-family home but also pretty much any for-sale housing anywhere in the country.
Thus, if 27 percent of all renters, or 9 percent of total households, don't expect to buy at some point, that's truly well less than half the folks who at this time don't appear to be qualified buyers in any way, shape or form. And we certainly won't be doing anybody any favors by encouraging non-qualified buyers to go out there and purchase in order to deplete the excess inventory of for-sale product.
A portion of the data used in this post is acquired through property management software, which provides property owners and managers the ability to report baseline statistics to county recorder's offices, news publications, and other reporting agencies. Improvements to property management systems will allow us to more efficiently track occupancy and rent/price fluctuations at city and county levels.
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Additionally, greater credit standards and down payment standards will further dampen home buyer demand as fewer will be unable to qualify than in the pass. This further diminishes the home ownership pool.
Finally, 77% of Gen Y (probably not as significant a survey group as the first two points which are national and based on activity over decades) indicate they prefer urban living and renting.
Your statistics raise an interesting point about the survey pool and I agree this information doesn't support the conclusion. However, the larger facts say that homeownership percentage is likely to fall every year for the next decade and in my opinion probably two decades.