What’s holding back renters from buying?
Even though a mortgage payment is more affordable than a rent payment on a monthly basis, renters say they can't buy a home due to the pricey down payment, according to the first Zillow Housing Aspirations Report.
Almost 70% of renters surveyed cite the down payment as a greater barrier to homeownership than debt, job security and qualifying for a mortgage. Just over half of renters cite qualifying for a mortgage as a barrier to homeownership, and half say debt is holding them back. Almost 40% of renters say job security is keeping them from buying a home.
The U.S. homeownership rate is near an all-time low and has been falling since 2004, although members of the largest generation of Americans — millennials — are coming of age and starting to think about buying a home and settling down. Rents are also at record highs, costing almost 50% of the median income in some cities. Making a monthly mortgage payment is cheaper than a monthly rent payment in all but two of the 35 largest U.S. metros, but first renters need to save enough money for a down payment.
The Zillow Housing Aspirations Report, a semi-annual survey sponsored by Zillow and conducted by IPSOS, asks 10,000 renters and homeowners in 20 metros across the country about their views on homeownership and their personal housing expectations going forward.
Here are some highlights from the report:
• Over half (63%) of renters are confident that they will be able to afford a home someday, with 25% planning on buying in the next three to five years.
• Millennial renters are more confident than any other generation that they will be able to afford a home someday, with 34% planning on buying in three to five years. Almost a quarter (22%) said they plan to buy in one to two years and 2 percent of millennial renters said they never plan on buying a home.
• The majority of respondents (66%) believe owning a home is necessary to live The American Dream, and 72%believe owning a home increases your standing in the local community — millennials believe these two statements more than any other generation.
• With home values across the country at their highest point since June 2007, cobbling together a 20% down payment on a home costs more than two-thirds of the U.S. median household annual incomev. In pricier markets like San Jose and Los Angeles, buyers must come up with more than 180 percent of the median annual income, making a home purchase out of reach for many aspiring homeowners.
"With home values close to record highs, it's no surprise renters are concerned about coming up with enough money to buy a home," said Zillow Chief Economist Dr. Svenja Gudell. "Rising rents are also a factor — it's extremely difficult to save when you're paying record-high rents. While it is possible to put down as little as 3% on a home, the trade-off is a higher interest rate and costly private mortgage insurance, a financial tradeoff that may make sense for some buyers."
Readers Respond: It’s all about who you know
Trade shows can often be overwhelming to navigate, especially if you don't have your priorities straight.
For a sector of our readers, it appears that the priority lies in mingling and rubbing elbows, however, with a number of other goals in close second and third.
Earlier this week, we polled our readers, asking: "What is your number one priority at industry trade shows, markets or conventions?"
The largest share — 26% — said "Meet people and network with my peers."
Another 24% said "Bring home information to improve my business," and 21% were concerned with "Finding specific new products."
"Take advantage of special deals or discounts" earned 18%, and another 12% elected to "Learn about general merchandise trends."
What's your trade show M.O.? Take the poll here.
Marketing Magic: Tackling painterly procrastination
PPG's Dulux Paints brand has a new campaign in town, and it's aimed at the chronic painting procrastinators among us.
The television campaign aims to encourage homeowners to tackle the painting projects they've been meaning to get around to by highlighting the "non-excuses" people use to put them off.
The campaign will also feature print, digital, and social media initiatives to help people spring into action.
“Not all homeowners are Pinterest junkies or do-it-yourself aficionados,” said Martin Tustin-Fuchs, brand manager, Dulux Paints by PPG. “The immediate satisfaction provided by a fresh paint job is often overshadowed by the prospect of preparation and decision-making related to painting, so people live with patchy paint jobs and regrettable colour choices for months, even years. It can become a real source of frustration and conflict in some households. For this reason, Dulux Paints wants to provide support, encouragement and a real sense of excitement about improving one's living environment.”
Dulux Paints stores across the country will also be at the heart of the “Procrastinators Anonymous” movement, offering expert advice and incentives, such as the “Buy-One-Get-One-Free” promotion, throughout the year.
“Our hope for this campaign is that it will make people laugh, but more importantly, it will position Dulux Paints as a resource to motivate and assist do-it-yourself painters with their painting needs,” Tustin-Fuchs continued. “Our in-store experts often double as coaches, and we encourage Canadians to take advantage of the support and expertise we offer in our stores.”
The campaign launches April 10, and the “Buy-One-Get-One-Free” promotional sale begins April 17.