Most view becoming a homeowner as an important stepping-stone in their life — a chance to put down roots and fulfill the American Dream.
Although 90% of renters expect to purchase a home in the future, most believe it would be difficult to get a mortgage today, according to respondents to Fannie Mae’s recent survey.
The primary reason most are renting now is to financially prepare themselves to be ready to own in the future.
"The ongoing decline in the homeownership rate, as well as strong growth in multifamily property construction and investor interest in single-family rental properties, indicates a shift towards rentership, at least in the near-term," said Sarah Shahdad, analyst of Economic & Strategic Research at Fannie Mae.
The vast majority of renters believe owning a home is better when it comes to privacy, security and raising a family. However, they give the edge to renting when it comes to budget, stress and making the best decision in today’s economy.
For instance, 51% of renters think owning makes more sense than renting when comparing both the financial and lifestyle benefits of each housing choice, the survey said.
Additionally, 42% of those who expect to buy one day believe they will not be able to do so for at least five years.
Younger renters — 18 to 34 year-olds — are nearly twice as likely to say their main reason for renting is to prepare financially for future ownership, compared to renters at age 35 or above.
"Younger renters who prefer to own are much more likely than their older counterparts to say that they are renting mainly to make themselves financially ready to own," Fannie Mae explained.
Compared to homeowners, renters are more likely to have fewer assets, higher stress and less income, the survey said.
A majority stated they would take steps to improve their credit score or overall financial situation if they have troubling receiving a mortgage, or set their sights on a less expensive house.
Only one-quarter of renters would stop pursuing a mortgage.
"The strength of the economy, particularly job creation and real income growth, as well as the favorability of credit conditions should play significant roles in determining if and when many of these renters will see the fruit of their efforts to become homeowners," Shahdad concluded.