Many U.S. renters don’t feel confident about future homeownership. But why is that? According to a recent Redfin report, the lack of affordable housing is a top concern.

Approximately 3,000 U.S. residents were polled in February via a Redfin-commissioned survey. The survey asked various questions about their feelings toward potential homeownership in the future and the reasons for those feelings. From this data, Redfin found that 38% of participants did not see themselves owning a home soon (if ever). This is an increase of 27% over last year’s  Redfin survey done in May/June 2023.

Home availability was the prevailing concern for respondents at almost half (44%) of renters polled; 35% of renters expressed worry about saving for a downpayment, and 33% said homeownership seemed unattainable due to high mortgage rates. For 14% of renters, homeownership is not of interest.

It is no secret that home prices and mortgage rates are through the roof right now. The average household income needed to buy a starter home in America increased by 8% from last year. Household income must be approximately $76,000 before considering purchasing a starter home. It should be noted that this is an increase of almost 100% from pre-pandemic data.

Laws of Supply and Demand

Due to more demand for homes during the pandemic and limited home supply since, home prices have jumped more than 40%. The current mortgage rate is 6.82%, lower than the 8% high in October but still sizeable in comparison to the low rates of 2020.

So what does that mean for individuals buying now? Home prices are up 7% and growing, and mortgage rates have reached 10%. For many renters, the option to buy a home does not really feel like one. This is understandable, considering many renters already struggle to pay high monthly leases. In the survey poll, 24% of respondents admitted struggling to afford rent. 45% also said they sometimes struggle to pay rent on time.

Renters need help with affordability as well. Renters in the U.S. can expect to pay approximately $2,000 a month in rent —  the median asking rent in the country. There is some good news, though, since rates have moderated. Thanks to more apartments being built, renters can rest easy knowing that their current rate will likely stay the same for a while.

Hottest Places to Live

RentCafe analyzed nationwide apartment searches across its site this year, forming a list of the hottest, most desired places to live in the U.S. Atlanta rated high, coming out third behind Minneapolis, MN and Overland Park, KS. Although only 1% of the searches related to availability, Atlanta is a popular choice due to career opportunities and the rise of multifamily housing in the city.

In an Apartments.com survey, 19% of Atlanta locals rated affordability as their top reason for moving to the city. Rent in Midtown Atlanta averages a little above the national median. Still, respondents noted more affordable opportunities outside the city perimeter in Vinings, Sandy Springs and Norcross.

Looking further at Redfin’s data, Gen Z respondents ages 18 – 27 are among the most hopeful about homeownership. Only 8% said that owning a home seemed utterly unattainable. That is dramatic compared to 22% of millennials, 40% of Gen Xers and 81% of baby boomers.

Why is the percentage of baby boomers so low?  It is less about the desire to own a home and more about renting for the comfort and security of low-maintenance living and financial stability on a fixed income. For most, homeownership has already been obtained and individuals are looking for something different.