Whether someone chooses to buy or rent a home can depend on many factors.
Although we are partial to buying over renting, there are pros and cons to both scenarios.
For renters, when asked what is preventing them from buying a home, the number one reason millennials report is that they haven’t saved enough money. In fact, in a survey conducted by EllieMae, 47% of millennials reported that they didn’t think they had saved enough in order to buy a home. In comparison, the leading reason for Gen Xers and Baby Boomers is that they rent as part of a lifestyle choice – and not due to financial constraints.
Additionally, a significant number of renters (35%) believe they need 6-10% for a down payment on a house, and over half of all renters would purchase a home if they had enough money saved. Moreover, more than half of renters (57%) would be open to relocating to another state to afford to buy a house.
While it’s true some may not have enough money saved to purchase a home, the survey indicated that there’s opportunity for greater education for consumers around available loan type options, how much is needed for a down payment toward a home, and what kind of credit score is needed to qualify for various loan options. One-third (33%) of respondents believe they must have a good credit score, while 27% believe they must have a very good credit score to qualify for a mortgage loan.
On the other side of the coin, buyers are out in full force when it comes to a change in family status- such as getting married or having kids. The same survey by EllieMae reported that 40% bought a house due to these types of changes. However, it’s interesting to note that this percentage has steadily decreased as a reason for pursuing homeownership compared to those that took out a mortgage 3-5 years ago. Those who purchased a home more recently were more likely to cite a “need for more space” as their leading response compared to those who purchased in the last three to five years.
Job change displayed the largest growth when compared to previous years, growing 22% in the last year (compared to the year prior). As the unemployment rate edged down, more Americans were potentially better positioned to be able to buy a home.
Source: 2019 Borrower Insights Survey, EllieMae