- A majority — 59% — of multifamily tenants are renting by choice rather than necessity, according to a survey of renter sentiment conducted by Knightvest, a Dallas-based investor and manager with a portfolio of more than 55,000 units across the U.S.
- Of the survey’s respondents, which included more than 4,100 U.S. apartment renters, 31% are either ambivalent about or entirely uninterested in homeownership.
- Almost three-fourths reported that rising mortgage rates over the last several years had extended their timelines for buying a home. Of that number, 79% say current conditions have extended the time they expect to buy a home by at least several years or indefinitely.
When asked about their reasons for renting rather than owning their residences, 62% of respondents cited costs. Just over half preferred lower maintenance and repair responsibilities, while 35% liked the enhanced flexibility to relocate.
Not all respondents follow a linear path to homeownership. Almost 30% of renters reported that they had previously owned a home — including the majority of baby boomer respondents at 71%. Lower maintenance and repair needs were the top reason for renting among this group.
For younger renters who do want to own homes, the houses baby boomers have left behind have a high barrier to entry. Renters in the millennial demographic expected to need a yearly salary of $139,000 to be able to afford the home they wanted, while Gen Z renters expected to need $137,000 a year.
“The rent-versus-buy decision is increasingly nuanced given this dynamic macroeconomic environment, and it's interesting to see the data support what we're hearing anecdotally from residents,” said David Moore, Knightvest founder and CEO, in a release.
For-sale on the mend
While rising interest rates may have a hand in the share of renters that are delaying or pulling back from potential homeownership, that trend could flip if economic conditions change. Almost half, or 45%, of renters say they would be very or extremely likely to buy a home if rates fell, according to the results of Zillow’s 2023 Consumer Trends Report.
The Federal Reserve has signaled that the federal funds rate is likely to fall back in 2024, which would mean lower interest rates in the near future. “We expect the beginning of a long healing process to kick off in the housing market next year — [it’s] in a better place than it’s been in recent months,” Emily McDonald, rental trends expert at Zillow, told Multifamily Dive.
In the long term, the share of would-be buyers is increasing. Forty-three percent of renters surveyed by Zillow in 2023 said that they plan to buy their next home, up from 38% in 2022 and 34% in 2018 and 2019.
“This increasing share of would-be buyers may represent increasing pent-up demand for homeownership,” McDonald said.