Why So Many Renters Are Worried They Will Never Own a Home

As the housing affordability crisis persists, Americans are losing hope to be able to afford a home of their own.

Some 86% of renters in the U.S. want to buy a home but are unable to afford one, according to a poll by CNN and market research firm SSRS. And more than half (54%) of renters don’t believe they will ever own their home at all, the poll found. With these bleak stats, where does it leave those who are still dreaming of their own place?

Unaffordability Crisis

Home prices have grown year after year, making the housing market increasingly challenging to enter, depending on the location. The median sales price of single-family U.S. homes climbed to nearly $427,000 in June, a record high, according to the National Association of Realtors.

As the pandemic brought the advent of remote work, many Americans left expensive cities for hopes of lower costs of living elsewhere. The nation’s south-west, the so-called Sunbelt, especially benefited from this migration. But in turn, prices down South rose quickly, too.

Making matters worse, the Federal Reserve pushed up interest rates to combat the high pandemic-era inflation, raising borrowing costs for everyone from banks and companies, to prospective home buyers. That means those who are able to take the step to buy a home have to carry a much higher rate than they would have done at the start of the pandemic, when rates were much lower.

Case in point, of the homeowners who bought their property several years ago, when mortgage rates were dramatically lower, less than a third (32%) believe they could afford to buy in their neighborhood at present, per CNN’s poll.

Seeking Solutions

Rising home prices are good for existing homeowners, because their net worth increases along with their property value. But things are different for renters with the dream to own a home down the line.

The White House recently proposed a policy to help first-time homebuyers through tax incentives. But if home prices continue to surge, the wealth gap between renters and homeowners could continue to widen, making it harder for the proposed policy to be effective.

The light at the end of the tunnel may be the Fed, which is expected to cut interest rates soon. While the central bank is holding a rate setting meeting this week, market expectations are pricing a first rate cut for September, according to the CME FedWatch tool.

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