Renters struggling to save for a down payment are concerned about rising rents and utility costs, with less believing renting as more affordable than owning, according to recently released research from Freddie Mac. Holding renters back from homeownership, however, is an emphasis on renting more energy-efficient homes and saving elsewhere—for education, emergencies and retirement.
“We will continue to monitor the sentiment of renters closely,” said David Brickman, executive vice president of Freddie Mac Multifamily, “but for now it appears renter concerns about household finances and rising rents may be stimulating less interest in buying a home and more on renting one with cost-saving features.”
Gen-Xers showed the most concern about household financial situations over the past year (53 percent to 70 percent), followed by millennials (64 percent to 68 percent) and baby boomers (61 percent to 62 percent), according to the research. The percentage of renters, in addition, who say they have enough money to go beyond each pay day fell from 41 percent to 34 percent over the past year. The percentage of renters who say they either live pay day to pay day, or don’t have enough for basics between paychecks, rose from 59 percent to 66 percent.
When asked to rank essential saving goals, millennials put emergencies first (61 percent) followed by children’s education (52 percent), retirement (48 percent), professional development (45 percent) and a home down payment (40 percent). For Gen-Xers, the rankings were childhood education (59 percent), emergency funds (54 percent), down payment (53 percent) and retirement (52 percent). Among baby boomers, saving for emergencies and retirement was tied (42 percent), followed by down payment (25 percent).
Seventy percent of renters also say they are moderately to greatly concerned about higher utility bills; by contrast, only 63 percent shared the same levels of concern about potential rent increases. A large majority (88 percent) agreed multifamily properties with green energy- and water-saving features would help reduce their utility bills, with 84 percent saying green properties are generally better places to live. Nearly half (47 percent) say they are willing to pay more for an environmentally-friendly rental.
“This new data confirms several ongoing trends found in our earlier research,” says Brickman. “Specifically, that satisfaction with renting is increasing among renters overall and that renters in their prime homebuying years—millennials and Gen-Xers—see saving for education and other life goals as a higher priority than saving for a down payment. This provides further evidence that the increased propensity to rent that we have seen over the past 10 years is both broad-based and is likely to continue into the future.”
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