Although only half of surveyed households believe the economy is currently improving, nearly all young renters eventually want to buy a home and a convincing majority still view home ownership as part of their "American dream."
This was the finding in a new national consumer survey by the National Association of Realtors.
Additionally, the study of the financial outlook of households found that compared to earlier this year, an increasing number believe their personal financial situation will improve in the months ahead.
NAR's survey, entitled "Housing Opportunities and Market Experience (HOME)," tracks real estate trends, including the views and aspirations of current renters and homeowners regarding home ownership, whether it's a good time to buy or sell a home and their expectations and experiences in the mortgage market.
The survey data reveal that an overwhelming majority of current renters who are 34 years of age or younger want to own a home in the future (94%). Overall, 83% of polled renters have a desire to own, and 77% believe home ownership is part of their "American dream."
Lawrence Yun, NAR chief economist, said the survey's findings debunk the notion that young adults aren't interested in buying a home.
"Despite entering the workforce during or immediately after the worst of the financial and housing crisis, the desire to become a homeowner appears to be a personal goal for a convincing majority of young renters," he said. "Furthermore, there appears to be sizable, pent-up demand for buying that currently remains untapped because of a variety of economic and personal reasons impacting many households."
The top two reasons given by renters for not currently owning was the inability to afford to buy (53%) and needing the flexibility of renting rather than owning (19%). When asked what would likely be the main reason for buying in the future, renters cited lifestyle considerations such as getting married, starting a family or retiring (33%) and an improvement in their financial situation (26%).
"A combination of factors such as rising rents and home prices, limited supply, repaying student debt, and getting married and having children later in life has more to do with the currently under-performing share of first-time buyers than the idea that buying a home is not as desirable as it used to be," Yun added.
Households lukewarm about the future of the U.S. economy topped the list of concerns. Among all households (renters and homeowners) in the survey, the results highlight a split between those who agree the U.S. economy is on the right track and those who disagree. Only half of respondents believe the economy is currently improving, and 44% think the economy is actually in a recession.
Renters were only slightly more optimistic about current economic conditions, with 57% believing the economy is improving. Regardless of their confidence in the U.S. economy today, 76% of those who don't think the economy is improving still want to eventually buy a home.
"The promising stretch of job creation in several parts of the country in recent years has the housing market in 2016 on track for its best year of sales since the downturn," Yun said. "However, that only half of surveyed households believe the economy is improving can be attributed to the fact that some areas have been slow to recover and wages have yet to grow in a meaningful way for far too many families."
Despite uncertainty about the economy's current performance, at least 84% of all households within all surveyed age groups and education levels believe owning a home is a good financial decision. When asked if they believe this strongly or moderately, 76% who believe it's a good decision feel strongly about it.
Additionally, at least 85% of surveyed households in each age category as well as across all education levels believe home ownership is part of their personal American dream. The most appealing aspects of home ownership cited by those with this feeling include a place to raise a family (36%), owning their own place (26%) and a nest egg for retirement (14%).
NAR's survey found that more homeowners (82%) than renters (68%) during the polling period believe that it's a good time to buy a home. Furthermore, of those who thought it was a good time to buy, 64% felt strongly about buying. Among current owners, 61% believe it is a good time to sell a home, of which 53% felt strongly that it was a good time to sell.
According to the survey, roughly two-thirds (65%) think it would be very or somewhat difficult to obtain a mortgage. Furthermore, there are differences among income brackets.
Renter households making between $30,000 and $40,000 were the most likely to be declined a mortgage (10%), while 51% of those who make more than $50,000 a year have not tried but feel confident they would succeed in getting a mortgage. Overall, 5% of renters have recently tried and failed to obtain financing for a home.