According to a housing survey by the Federal Reserve Bank of New York, the prospect of renters transitioning to homeownership is fading away. Respondents believe they’ll never become homeowners.
Results reveal that nearly 75% of renters find obtaining a mortgage “somewhat or very difficult,” marking an almost 8.5% increase from 2023, which the New York Fed classified as a series low. Only 13.4% of renters envision owning a home in the future.
The survey indicates that attitudes towards real estate as an investment remain “strongly positive.” Just over 67% of respondents considered buying property in their zip code as a “very good” or “somewhat good” investment — a slight decrease from pre-pandemic levels.
Housing affordability has somewhat improved since summer 2023. The median price for an existing family home stands at $388,700, down from June 2023’s higher median price of $415,700, according to the National Association of Realtors’ Housing Affordability Index. The average monthly housing payment reported was $2,040.
The Fed survey — conducted in February — found that respondents anticipate housing prices to increase by over 5% and rental costs to surge by nearly 10% over the next year.
Despite expectations of the Fed cutting interest rates by year-end, survey respondents believe mortgage rates will continue to climb, reaching 8.7% in a year and 9.7% in three years.
Homeowners are inclined to stay put, particularly if they’ve secured a low mortgage rate. The New York Fed notes that few U.S. homeowners plan to move in the next three years. Currently moving rates are low nationwide. Rates were below 10% in 2019, whereas they averaged around 20% in the 1980s.