Pew Research: What Renters Think About Homeownership
Roughly a third of today’s renters say they rent as a matter of choice, and 72 percent of renters say they would like to buy a home in the future, a Pew Research Center survey conducted in November shows.
Reasons they are renting by choice include financial obstacles, specifically the inability to afford a down payment on a house; not being able to afford to buy the home or buy in the neighborhood they seek; and the desire to pay down debts before taking on a mortgage. Financial obstacles to homeownership loom larger among nonwhite adults.
“The flexibility of renting” ranked fourth among reasons why renters have chosen to rent, at 30 percent for whites and 31 percent among non-whites.
The survey was conducted Nov. 3-6 and Nov. 17-20, 2016, among 2,000 adults nationwide.
Given the modest amounts of financial assets owned by renters, how likely are they to have the required down payment to obtain home financing? Data from September 2016 show that the typical home in the bottom third of all U.S. homes was valued at $107,100. An optimistic estimate is that the mortgage lender for a conventional home loan requires a 3 percent down payment, or $3,213, to secure financing. The Federal Reserve data indicate that the typical renter would be hard-pressed to have the financial assets to obtain financing.
This assumption of a 3 percent down payment is an exceedingly optimistic one for a segment of buyers. Although lending standards have recently eased, higher down payments are more common than they were before the Great Recession. And, since 2008, low credit score borrowers have had to make larger down payments on average than higher-scored borrowers.