McLEAN, VA–More Freddie Mac research on the state of affordable housing in the US shows that a large number of renters view renting as an option that fits their lifestyle and is a strategic choice at many life stages. More renters believe this despite their view that housing prices — both to purchase and rent — continue to rise and supply continues to tighten. The study also finds that an increasing number of America's renters are satisfied with their living situation and consider it the most affordable option for the foreseeable future.
Changing attitudes toward renting, in short, are playing a significant role in the growing demand for rental housing.
“These changing perceptions, combined with rising rents and tightening supply of affordable housing, are likely to fuel continued multifamily market growth in the years ahead,” David Brickman, executive vice president and head of Freddie Mac Multifamily, said in a prepared statement.
Seen As A Good Choice
Conducted by Harris Poll, the survey finds an increasing number of renters view renting as a good choice for them, increasing in August to 57% compared to 52% in March, 2017. Over half of renters, or 58%, believe that “renting fits my current lifestyle”. Of these respondents, 63% of Millennials ages 21-27 and Baby Boomers ages 53-71 feel the statement reflects their views. In addition 55% see renting as a strategic choice at many life stages, with 45% of younger Millennials, 51% of older Millennials (aged 28-37), 56% of Generation X (aged 38-52), and 68% of Boomers sharing those views.
Evolving Views of Affordability
Viewpoints on affordability are also changing, the survey shows, with perceptions of renting as more affordable increasing across all generations. Since September of 2016, the view that renting is more affordable has increased by more than 10 percentage points among all age groups.
Simultaneously, most renters believe all housing is becoming costlier, with 57% believing home prices have increased, and 56% viewing rents as on the rise. The research finds that renters living in urban areas are feeling the cost increases the most — with 6 out of 10 urban renters saying housing prices are more expensive compared to last year. Further, most renters see supply tightening, with 52% citing the supply of available homes to purchase — and 63% viewing available rental options — as about the same or lower than last year. The rental shortage is particularly pronounced among rural renters with a third (33%) believing there are fewer homes to rent where they live.
An increasing number of renters believe it will be more affordable to rent than to own in the future. The number who view renting as more affordable in the next 12 months increased to 25% from 20% in March, 2017, while the number who believe buying a home would become more affordable decreased to 15% from 18% over the same period.
A Happy Rental Experience
The survey also looked at consumers' experience with renting and found that satisfaction remains high and largely unchanged. Approximately 60% of renters express satisfaction with their overall rental experience. While 41% of those surveyed cited affordability as the primary driver of their renting decision, one-third (33%) said buying a home is just not a priority at the moment.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
