Renters hesitant about buying a home

In recent years, a large number of homeowners have turned into renters. Many of those consumers have expressed a strong desire again to own a home, but despite favorable aspects in today’s market, many renters are holding off on purchasing a home.

Key considerations are the rising of homes, the lack of inventory in many markets, concerns about the required down payment and qualification for obtaining a mortgage loan.

“Lofty home-price growth and tight supply are leading to softening confidence among renters about whether it’s a good time to buy a home,” according to the latest installment of the National Association of Realtors Housing opportunities and Market Experience home survey.

“The survey also found that a misconception about how much of a down payment is needed to buy could be unnecessarily delaying some young adults from entering the market.”

In NAR’s third quarter home consumer survey, respondents were asked about their confidence in U.S. economy and various questions about their housing expectations, including a series of questions related to down payments and the amount of money they believe they need to purchase a home.

“During the autumn months, the share of homeowners and renters who believe now is a good time to buy remains at a solid majority but has crept downward since the beginning of this year. Seventyeight percent of homeowners and 60 percent of renters said it’s a good time to buy. In the inaugural home survey in December 2015, 68 percent of renters said it was a good time to buy.”

Lawrence Yun, NAR chief economist, said it’s clear the ongoing run-up in home prices and severe inventory shortages in a large portion of the country are hitting consumer psyche — especially among renters.

“This summer’s historically low mortgage rates injected some additional demand into the market, but the dearth of homes for sale continues to keep a lid on sales but not prices,” he said.