Nearly two-thirds of non-homeowners polled say affordability woes block homeownership
Sun., April 10, 2022
Home prices are still soaring. Affordability grows more challenging by the month. Even so, homeownership remains very much part of the American dream, a Bankrate survey finds.
Bankrate’s Financial Security survey for March shows that Americans place a higher value on homeownership than on any other indicator of economic stability, including a successful career and a college education.
Meanwhile, Americans who have yet to achieve homeownership say the combination of soaring home values and rising mortgage rates are holding them back.
“Non-homeowners cite insufficient income, high home prices and not being able to afford a down payment or closing costs as the most common barriers to becoming a homeowner,” says Greg McBride, Bankrate’s chief financial analyst. “High – and rising – home prices can contribute to the feelings of not having enough income or savings accumulated to buy a house.”
The coronavirus pandemic led many homeowners to reconsider their living arrangements, but most who responded to Bankrate’s survey said their current home suits them just fine.
“Nearly three in four homeowners say they would still buy their current home if they had it to do all over again,” McBride says. “Paying down debt, building savings and knowing the limits of what you can afford all provide the stable financial foundation on which no-regrets homeownership is built.”
Homeownership is front and center in the American dream
Asked to rank the hallmarks of economic prosperity, 74% of Americans say they place the highest priority on owning a home. This milestone ranks above being able to retire (cited by 66% of respondents), having a successful career (60%), owning an automobile (50%), having children (40%) and getting a college degree (35%).
Viewing homeownership as part of the American dream is common in every age group, and it’s the most-mentioned milestone among Americans 26 and older. Only Generation Z (ages 18-25) doesn’t rank it in the top spot – but Gen Z still rates homeownership (59%) a close second to achieving a successful career (60%).
The tendency to cite homeownership as part of the American dream increases with age, from 59% among Gen Zers to 87% among seniors ages 68 and up.
Most homeowners would buy the same home again
Among homeowners, 72% say they would do it all over again – they’d buy their current home, even with the benefit of hindsight. Just 18% of homeowners would not, and 10% are undecided. The sentiment is consistent across the country, ranging from 69% in the Northeast to 73% in the Midwest.
Those findings add nuance to what has been considered a nationwide scramble to move over the past two years. While remote work did indeed allow many Americans to move away from expensive housing markets, most, it seems, are content to stay where they are, according to Bankrate’s poll.
Affordability is a challenge
As a result of skyrocketing prices, it’s getting harder for Americans to afford homes. Just 54.2% of homes sold during the fourth quarter of 2021 were affordable to families earning a typical income. That number stood at 66% at the start of the pandemic, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index.
With home prices at record levels and the inventory of homes for sale hitting a record low in January, the affordability squeeze is tightening.
Among adults who don’t own a home, the primary reasons are not enough income (43%), out-of-reach home prices (39%) and being unable to afford a down payment and closing costs (36%). Other reasons cited were poor credit (22%), simply not being ready (22%), mortgage rates that are too high (17%), lack of inventory of homes for sale (13%), and having too much debt (13%). Some 14% of those who don’t own a home indicate they never want to, regardless of circumstances.
Among those not owning homes, 44% of millennials pointed to home prices climbing too high while 44% of Gen Zers indicated they’re just not ready to be homeowners. A lack of sufficient income was cited consistently across all age groups and was the most-mentioned reason among Gen Zers, Gen Xers and baby boomers. Among millennials, high home prices (44%) edged out lack of income (42%).
Gen Xers (27%) and millennials (24%) were the age groups most likely to say their credit scores fall short. Never wanting to own a home under any circumstances was lowest among Gen Zers (9%) and millennials (12%) as compared to Gen Xers (17%) and baby boomers (18%).
Many who can’t afford homes are throwing in the towel
Homeowners and non-homeowners alike were asked to what extent they might go to find affordable housing. The most common response, cited by 42%, is nothing – they wouldn’t be willing to do anything to find more affordable housing. Among the steps respondents would be willing to take, 27% would move out of state, 21% would buy a fixer-upper, 20% would move farther from family and friends, 13% would move farther from work and 11% would be willing to move to a less-desirable area.
Those not willing to make any changes in pursuit of affordable housing were most concentrated in the South (47%) and least prevalent in Western states (36%). Those in the West were most inclined to move out of state (33%), followed closely by those in the Northeast (31%). Residents of Southern states (22%) and Midwestern states (25%) were less inclined to relocate out of state.
This survey is based on online interviews of the YouGov panel of individuals who have agreed to take part in surveys. Emails were sent to panelists selected at random from the base sample. Total sample size was 2,530 adults. Responses were collected March 2-4, 2022. Figures are weighted and are representative of all U.S. adults.
Local journalism is essential.
Give directly to The Spokesman-Review's Northwest Passages community forums series -- which helps to offset the costs of several reporter and editor positions at the newspaper -- by using the easy options below. Gifts processed in this system are not tax deductible, but are predominately used to help meet the local financial requirements needed to receive national matching-grant funds.
Subscribe now to get breaking news alerts in your email inbox
Get breaking news delivered to your inbox as it happens.