The dream of owning a home has become increasingly out of reach for renters, as revealed by a recent survey conducted by the New York Federal Reserve. The survey, which was released on Monday, showed a record low of 13.4% of renters still holding onto hopes of “residential mobility,” down from 15% in the previous year. This decline is a clear indication of the challenges faced by renters in achieving the American housing dream.
One of the major obstacles in transitioning from renting to homeownership is the difficulty in obtaining mortgages. The survey found that 74.2% of renters viewed getting a mortgage as somewhat or very difficult, a significant increase from previous years. This indicates a growing sense of pessimism among renters about their ability to afford a home in the future.
Another factor contributing to the challenges faced by renters is the high mortgage rates and housing costs. Currently, a 30-year fixed-rate mortgage carries an average borrowing rate of 7.22%, the highest since late 2023. Additionally, the median housing price in February was $388,700, the highest since November. These high costs make it difficult for renters to save enough money to make the transition to homeownership.
The survey respondents also expressed concerns about the future outlook for housing prices and mortgage rates. They expect housing prices to increase by 5.1% over the next year, nearly double the rate expected in previous years. Furthermore, despite potential interest rate cuts by the Fed, respondents believe that mortgage rates will continue to rise, reaching record highs in the coming years.
Renters are also facing challenges on the renting front, as rental costs are expected to increase by 9.7% over the next year. This significant increase in rental costs adds further pressure on renters who are already struggling to make ends meet.
The survey conducted by the New York Federal Reserve highlights the growing challenges faced by renters in achieving the dream of homeownership. With high mortgage rates, rising housing costs, and increasing rental prices, renters are finding it increasingly difficult to make the transition to owning a home. It is clear that more needs to be done to address these challenges and make homeownership more accessible for all individuals.