Apartment List shared results from its 2019 Renter Survey, which asked over 10,000 millennial renters about their homeownership goals, savings, debt, and barriers to purchasing a home. They found a rising share of millennial renters planned to rent forever, saving for a down payment was cited as a chief obstacle to homeownership for many, and student loan debt made a notable difference in how much individuals had saved.
Nationally, 12.3% of millennial renters say they plan to “always rent,” up from 10.7% last year. Plans for homeownership are similar for white, Asian, Hispanic, and multi-racial respondents, but black respondents were more likely to expect to buy a home—only 8.7% of black millennial renters reported they planned to rent forever. Among respondents who plan to buy a home, 70% report that they are waiting because they cannot afford to buy. Among those who plan to rent indefinitely, 69% report that choice is driven by affordability. In another Apartment List survey conducted this year, 62% of renters claimed that owning a home would be the financially preferable choice if they could afford it.
The researchers also asked about financial obstacles to homeownership. Sixty-one percent of millennial renters thought they would be unable to afford the down payment. While only 29% of white millennial renters were concerned that bad credit could prevent them from affording a home, 60% of black millennial renters expressed this concern. Among those who reported they wanted to buy a home, 48% had no savings set aside, and another 31% had less than $5,000 saved. Only 13% of millennial renters will be able to afford a traditional 20% down payment in the next 5 years. Even assuming that every respondent qualified for a loan with just 5% down, fewer than half of aspiring millennial homeowners will be financially ready in the next 5 years.
Millennial renters have lower expectations of family assistance than they did in 2018. Student loan debt was also a significant financial obstacle. Respondents with student loan debt are saving nearly $100 less each month for a down payment. The researchers consider how Senator Bernie Sanders’s student debt forgiveness proposal would affect the affordability of homeownership. Assuming that all monthly student debt payments were committed to down payment savings, the share of millennial renters who would be able to afford a 10% down payment would rise from 25% to 38%.
The full paper can be read at: https://bit.ly/2rcd10y