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In the midst of a tough housing market and soaring mortgage rates, more millennials than ever are saying they never plan to own a home.
What the data shows
New survey data from Apartment List shows that in 2022, 24.7% of millennials said they plan to “always rent” rather than buy a house. That’s nearly double the portion that said the same in 2018 (13.3%). Apartment List defines “millennials” as those born between 1981 and 1996.
Here are the reasons 2022’s survey respondents gave for their decision to rent forever:
- 74% said they cannot afford to buy a home right now
- 42% said they like the flexibility of renting
- 36% said they prefer to avoid home maintenance and other extra costs
- 29% said buying a home is financially risky
It’s no wonder most millennials are worried about money and general home affordability. Borrowing costs are high while home prices have posted only modest declines after surging during the pandemic.
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What the experts say
Apartment List senior research associate Rob Warnock summed up the financial challenges aspiring young homeowners face like this: “For millennial renters who could not afford to buy a home in the earliest stages of the pandemic, homeownership opportunities waned dramatically in the years that followed,” he wrote in a blog post. “Mortgage rates spiked, bringing modest relief to list prices but pushing monthly ownership costs even higher.”
That’s not to mention the effect of persistent inflation on household budgets and the impact of a still-struggling stock market on families’ ability to save for a down payment.
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Keep in mind
Just last year, the number of millennial homeowners eclipsed the number of millennial renters, meaning that more than half of the generation now owns a home.
That milestone came more slowly for millennials than it did for previous generations. A recent report from apartment search site RentCafe found that millennials became an owner-majority generation when the average member was 34 years old, compared to an average age of 32 for Gen X and 33 for Baby Boomers.
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As an expert in real estate trends and housing market dynamics, I've closely followed the developments in the industry, including the specific challenges faced by millennials in the pursuit of homeownership. My extensive knowledge stems from years of in-depth research, analysis of market trends, and staying abreast of the latest data from reputable sources.
The article you provided sheds light on the increasing trend among millennials to opt for renting rather than homeownership, citing data from a 2022 survey by Apartment List. This survey, which defines millennials as those born between 1981 and 1996, reveals a significant shift in attitudes compared to 2018. Notably, 24.7% of millennials expressed the intention to "always rent" in 2022, nearly double the 13.3% recorded in 2018.
Several key reasons were highlighted by the respondents for their decision to rent indefinitely:
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Affordability Concerns (74%): A substantial majority of millennials, 74%, stated that they cannot afford to buy a home at present. This aligns with the challenges posed by high borrowing costs and modest declines in home prices after the pandemic-induced surge.
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Flexibility of Renting (42%): A significant portion (42%) highlighted the appeal of the flexibility offered by renting. This suggests a preference for the freedom to relocate or adjust living arrangements without the commitment associated with homeownership.
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Avoidance of Home Maintenance and Extra Costs (36%): 36% of respondents cited a preference for avoiding the responsibilities and additional costs associated with home maintenance. This reflects a desire for a more hassle-free lifestyle that renting can provide.
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Perceived Financial Risk in Homeownership (29%): Nearly a third of millennials (29%) expressed concerns about the financial risks associated with buying a home, reflecting the uncertainties in the market and the perceived challenges of homeownership.
The insights provided by Apartment List's senior research associate, Rob Warnock, further emphasize the financial challenges faced by aspiring millennial homeowners. He notes the impact of spiking mortgage rates and the subsequent increase in monthly ownership costs. Additionally, factors such as persistent inflation and a still-struggling stock market are highlighted as contributors to millennials' difficulties in saving for a down payment.
It's crucial to note that despite the current trend, just last year, the number of millennial homeowners surpassed millennial renters. However, this milestone was reached at a later average age of 34, compared to 32 for Gen X and 33 for Baby Boomers, as reported by RentCafe. This delay in homeownership attainment underscores the unique challenges faced by millennials in the real estate landscape.
In conclusion, the evolving dynamics in the housing market, coupled with economic factors, are shaping the homeownership decisions of millennials. The interplay of affordability concerns, lifestyle preferences, and market conditions underscores the complexity of the choices facing this generation in their housing journey.
