A recent survey has revealed that 20% of people in the US believe they can only become homeowners by winning the lottery. Furthermore, just 53% think they will buy a home in the future. As a result, renting remains the sole option for a significant proportion of the population and, by extension, US rental properties will continue to offer the only alternative.
Homeownership a pipeline dream
A survey by Divvy Homes has found that the traditional American dream of homeownership remains out of reach for a large slice of the population. Two of every five respondents said winning the jackpot would be the only chance at buying a property.
A further quarter said that inheriting a large sum of money would be their sole means of entering the property market. While 19% claimed that marrying a rich partner would be their ticket to buying a home.
“A majority of aspiring homebuyers feel that homeownership is always just beyond their reach”, said Adena Hefets, CEO of Divvy Homes. She added that “it would take luck, extraordinary circumstances, or a serious change in the mortgage process to make it possible for them to own a home in today’s economic climate.”
Timescale to own a home
Most participants in the survey said they expected it to take three to five years to afford a property. One third claimed it could be five or more years before they bought, while a fifth said homeownership was out of the question.
As well as rising property prices, would-be homeowners face the rising costs of mortgage financing. The Divvy Homes survey found that over half of respondents believe they would be unable to obtain a loan.
“There are so many factors putting downward pressure on a potential homeowner’s buying power – high interest rates, a lack of supply, increasing cost of living – that the starter home seems to be on the verge of extinction,” said Hefets.
Rentals only option
As a result, potential buyers have no alternative but to turn to US rental properties. According to Divvy Homes, the current situation “keeps so many of them renting and locked out of homeownership”.
46% of respondents cited “throwing money away on rent” as their main objection to renting a property rather than buying one. A further 41% said that they felt uneasy about the stability of their long-term living situation in a rental, while 34% pointed to rising interest rates as one of their concerns.
Potential of US rental properties
This latest survey confirms two fundamental aspects of the current US housing market. Firstly, the obstacles in the way of homeownership for so many Americans and, secondly, the potential for return on buy-to-let properties.
While rental rates have recently stabilised in many parts of the US, they continue to stand at an all-time high on the back of solid demand. In addition, the availability of homes to let remains low, a situation unlikely to reverse given the challenges facing would-be homeowners.
Meanwhile, landlords are enjoying the best yields from US rental properties for years. An ATTOM survey for this year revealed average rental returns of 7.5% across the country, with counties in South Florida expected to offer double-digit yields.
(Source: Divvy Homes)