New research conducted by Freddie Mac released Tuesday indicates that people living in single-family rental (SFR) properties (a house, townhouse, or condo) may be more likely to buy a home than those living in apartments.
Freddie Mac's latest survey, conducted in June, found that overall, about 55 percent of renters in both single- and multifamily properties intend to continue renting in the next three years. When dividing up the two categories, however, the data indicated that 53 percent of renters in SFR properties intend to buy a house in the next three years compared to just 36 percent of multifamily renters who plan to buy in that period.
One factor in deciding when to buy a home is how satisfied the renter is with the rental experience, according to Freddie Mac's June survey. Approximately 68 percent of those satisfied with their rental experience say they intend to continue renting, compared to 32 percent who say they plan to buy a home. A higher percentage of apartment renters (67 percent) than SFR property renters (60 percent) reported being satisfied with the rental experience.
"As we gather data each quarter, we are finding the old perception that renting is something people do until they buy is not always true. The trend shows that satisfied renters are more likely to continue renting, even as we are seeing rising rents in the market," said David Brickman, EVP of Freddie Mac Multifamily. "Dissatisfaction may drive renters to buy, and we are seeing a slight decrease in satisfaction among single-family renters. We will continue to monitor this for stronger indicators and trends, but for now, the single-family rental home market may be a good place to look to find potential home buyers."
According to the U.S. Census Bureau, about 15 million households are of the SFR variety, while about 25 million rent apartments.
"The number of U.S. renter households is up again for the 10th straight year, according to the U.S. Census Bureau," Brickman said. "More households of all sizes, income levels and age ranges now rent their homes. Renters are leading household formations, which are expected to keep climbing due to the improving economy, millennials continuing into adulthood and immigration."
"Dissatisfaction may drive renters to buy, and we are seeing a slight decrease in satisfaction among single-family renters."
In the June survey, 44 percent of respondents who have lived in their homes for at least two years say they experienced an increase in their rent in the last two years, compared with 38 percent in a March survey. About 70 percent of those who experienced in increase say they want to buy a home but cannot afford to, while 44 percent said they would like to buy a home and are currently searching. About 49 percent in September said they like where they live and plan to stay regardless of how much the rent increases, compared to 46 percent in March.; 44 percent in September said they have put off plans to purchase a home, compared to 51 percent in March.
Freddie Mac commissioned Harris Poll to survey approximately 2,000 adults online each quarter for both the June and September surveys. Click here to see the March survey, or click here to see the June survey.