Homeownership Hopelessness: Renters Doubt FuturePossibilities The rise in home prices coincides with a severe drop in new housing construction after the Great Recession, the report said. Photograph: David Paul Morris/Bloomberg via Getty Images The American dream of owning your own home is dead, according to the majority of renters surveyed in a new poll shared exclusively with the Guardian, and the areas they live in have become so unaffordable they are “barely livable”. The poll, conducted by the Harris Poll Thought Leadership and Future Practice, asked survey takers to identify themselves as renters or homeowners, along with other demographic information. Those polled were asked their opinion on home ownership in the United States. For many, especially renters, the outlook is bleak. Though the vast majority of renters polled said they want to own a home in the future, 61% said they are worried they will never be able to. A similar percentage believe no matter how hard they work, they’ll never be able to afford a home. “When you think about Maslow’s hierarchy of needs, and housing is right at that foundational level of security, the implications on consumer psyche when things feel so unaffordable is something that will impact everyone,” said Libby Rodney, chief strategy officer at Harris Poll. The American dream of owning a home “is looking more like a daydream for renters”. The state of the US housing market underlines just how difficult the situation has become. Redfin estimates only 16% of home listings in 2023 were affordable to the typical US household. In comparison, 50% of listings in 2013 were affordable on a median income. Much of the housing market’s turbulence started during the pandemic. In 2021, when interest rates were near zero, home sales reached 6.1m – the highest since 2006, before the crash of the housing bubble. Then, as inflation reached a decades-high in summer 2022, the Federal Reserve started to raise interest rates. The 30-year mortgage rate hit 7.79% in 2023, a two-decades high. By the end of the year, home sales had dropped to a 30-year low, according to the National Association of Realtors. The Harris Poll showed most Americans, both renters and homeowners, are hesitant about making any real estate moves given the current economic environment. But interest rates are just one part of the story. Home prices were on the rise even before the pandemic, going up each year since 2012, according to Harvard’s Joint Center for Housing Studies’ 2023 annual State of Housing report. The rise in home prices coincides with a severe drop in new housing construction after the Great Recession, the report said. Though construction on single-family homes bottomed out in 2009, the number of new single-family homes being built has been far below pre-recession levels, while the US population has continued to grow. So even when interest rates come down, home prices will still be high as inventory remains low. This is good news for homeowners, who are seeing their wealth rise, but bad news for more and more renters who are being priced out of the housing market. Because of the rise in home prices, the wealth gap between homeowners and renters has only been growing. In 2010, homeowners made up 54% of bankruptcies. In 2023, they made up only 23.4%, according to an Axios/Harris poll published in January. Nearly half of renters in the poll said they didn’t have enough money at the time a bill was due in the last month, compared to 29% of homeowners. The new Harris poll also touched on concerns homeowners and renters have about the impact of climate change on home insurance and the increasing role hedge fund companies are playing in real estate. Four out of 10 homeowners said their home insurance had gone up because of natural disasters in their area, while 55% of all polled said that they expect more home purchases will be in the hands of hedge fund companies in the future. The outlook of renters is especially concerning when considering the racial gap in homeownership rates. At the end of 2023, the homeownership rate for white Americans was nearly 30% higher than the rate for Black Americans – 73% compared to 45%. Given that the value of a homeowner’s property makes up a significant chunk of their net worth – an average of 45% – not owning a home has left many Black Americans behind. In 2022, for every $100 in wealth held by white households, Black households held just $15. Buying a home in the US is starting to look like a Catch-22: Owning a home can help a family build their wealth, but in order to afford a home, a family needs to have some degree of wealth in the first place. In the new Harris poll, 72% of renters said they would need to be gifted or inherit money in order to own a home any time soon. Even compared to after the 2008 recession, “there’s just a lot of uncertainty and instability” in the economy, Rodney said. Even though inflation has gone down and wages have been rising, the economy still feels weird to many Americans. “These emotions drive people to be pessimistic about their ability to save for a house in the future,” Rodney said. “That’s kind of being reflected in this poll, this reckoning with instability in the economy.” Rodney said the poll highlights the need for creative solutions to address the homebuying crisis. Two-thirds of renters in the poll said that they would need some kind of out-of-the box financing methods, including crowdfunding or rent-to-own measures, in order to afford a home. “What you see is fundamentally, in the psyche of Americans, they want to own homes. But it’s: what is it going to take?,” Rodney said. “How do you meet these desires in a way that creates a lot of security for people?” « Previous Article Next Article » Share This Article Choose Your Platform: Facebook Twitter Google Plus Linkedin Related Posts BRICS Expansion and De-Dollarization Efforts Challenge USand EU Economic Dominance READ MORE The Risks of Gold and Silver ETF's vs. Physical Metals READ MORE Inflation Is Down but Don't Thank the Fed READ MORE High Interest Rates Likely Dampened Americans’ Economic Mood: Study READ MORE Hot US jobs report tempers Fed rate cut outlook READ MORE Add a Comment Cancel replyYour email address will not be published. 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