Wednesday, August 17, 2011

Renters Plan to Continue Renting. Blame Uncertainty

This will put more downward pressure on housing.

Sixty-four percent of respondents said that the economy is on the wrong track, the highest number in the six-quarter history of the survey.  In the wave of interviews conducted in July for the third-quarter report this number rose to 70 percent.
Persons reporting concern about their job security, 26 percent of those interviewed, expressed more anxiety and pessimism across the board than those respondents who were not concerned about losing their jobs in the next 12 months.  For example, 33 percent of employment-concerned Americans thought they had sufficient savings compared to 49 percent of the others and 44 percent said their household expenses had increased significantly over the last year while only 35 percent of the unconcerned made that statement.  Concerned respondents were also less likely to view this as a good time to buy a house (65 percent against 76 percent for those who were not concerned about their employment) and more likely to rent than to buy the next time they moved (34 percent versus 24 percent.) 
Continued weak demand
"Survey data make clear the relationship between home purchase demand and concerns about the stability of employment. Dissatisfaction about the direction of the economy and related employment fears are damping demand to buy homes and slowing the recovery. People who believe owning is a better deal than renting are nonetheless planning to rent, at least until things improve it would seem."
More than 50 percent of the renters responding to the survey live in single-family homes while another 35 percent live in small (under five units) multi-family housing.  Only 11 percent reported living in large (50+ unit) complexes.   Single-family renters tend to have about the same income levels as multi-family renters, but are younger and are much more likely (47 percent to 27 percent) to have children living at home.  Single-family renters are more likely than multi-family renters to consider owning a home as being more sensible than renting (74 percent to 68 percent) but both groups plan to continue renting.  Fifty-four percent of single-family renters and 67 percent of multi-family renters say they will rent rather than buy their next home.  
Both groups of renters are pessimistic about the chances of financing a home.  More over 70 percent say it would be somewhat or very difficult for them to get a home mortgage compared to 53 percent in the general population and 56 percent of underwater homeowners.  While roughly the same percentage of each rental group cited debt, down-payment, income, and job security as reasons a mortgage might be unobtainable, 33 percent of single-family renters cited their credit history as a hurdle compared to 20 percent of multi-family renters.
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