Freddie Mac’s latest survey reports that affordability remains critical for consumers looking to rent or enter the housing market.
“The housing market is strong and, based on our survey, the low mortgage rate environment may inspire both renters and owners to make an educated move this spring,” said David Brickman, CEO of Freddie Mac. “While Baby Boomers tend to be satisfied with their current housing situation, younger generations are still struggling to determine whether to rent or purchase a home, largely due to lack of supply and affordability constraints.”
The survey, however, found 84% of renters believe renting is more affordable than owning—an all-time survey high and up 17 percentage points from February 2018.
Eighteen-percent of renters are “not interested” in ever purchasing a home—four-percentage points higher from August 2017.
The share of renters who believe renting is more affordable has risen from 69% in 2016 to the current rate of 84%. Those who believe homeownership is more affordable has fallen from 2016’s 31%.
Freddie Mac also said that 42% of renters paid more than one-third of their household income on rent compared to 24% of homeowners on their mortgage. Forty-percent of renters plan to purchase a home due to low interest rates and 46% of homeowners plan to renovate in the next few months.
Older millennials were found to be those most burdened by rent, with 48% spending more than one-third of their income on rent payments. Forty-percent of younger millennials spend more than one-third of their income on mortgage payments—the highest among the generations studied.
Also, 62% of renters continue to be satisfied with their rental experience, which, however, is a decline from 2018’s 66%.
Baby Boomers were the most satisfied with their overall experience at 71% and 61% prefer to live in a smaller home. Half of all boomers polled were satisfied with their rental experience compared to older millennials (39%), Gen X (35%), and younger millennials (33%).
Twenty-seven percent of Baby Boomers who rent said they will never move, opposed to 9% for Gen Z and 6% or millennials.