In a recent Credit Sesame survey, we asked 1,000 consumers about home affordability, and nearly half of respondents age 18 to 34 said they rent because cannot afford to buy where they live or work. This led us to question whether homeownership, which is part of the American dream, is no longer realistic, especially for Millennials and younger generations.
Will the next generation of Americans rent forever?
From the survey, 60% of respondents who are 65 or older said they own their home, compared with 23% of those age 18-24. Although older generations are more likely to rent by choice, but that is not the case for nearly a third of Millennials (32%) and consumers who are 45-54 years old (30%).
The biggest obstacle to owning a home, for Millennials
Millennials point to lack of money for a down payment as their main reason why they cannot afford to buy a home.
More than half (51%) of respondents age 18-24 chose “I don’t have enough money for a down payment” as the reason why they cannot afford a home.
So did 43% of those age 25-34.
What about credit?
Nearly a quarter of consumers in prime home buying age (18 to 35 years old) point to a low credit score as their main reason why they cannot afford to buy. Alarmingly, so do those between the ages of 45 and 64.
When survey respondents were asked whether they plan to buy a home in the next six to 12 months, 86% of renters said no, only 14% said yes. Not surprisingly, the percentage of respondents not planning to buy a home was highest for those age 55 and older, while the percentage of those who do plan to buy was highest among respondents age 25-44 (prime home buying age).