In growing numbers, renters are taking a pass on the American Dream

Cheaper, more convenient than buying, they say

(Justin Sullivan/Getty Images)

Rising values and a shortage of single-family homes on the market have made renting more attractive than buying for more and more people, according to a pair of recent studies that reflect shifting attitudes about the American Dream across age groups.

More than three out of four renters surveyed by Freddie Mac in August said it's cheaper to rent than to buy a home, up more than 10 percentage points from September 2016. That's helped drive down the percentage of renters who are actively working toward homeownership, from 21 percent in January 2016 to 14 percent in August, according to the survey.

"Our rental survey confirms what we're seeing in the market -- that a growing number of individuals across demographic groups view renting as more affordable and better suited to their current economic situation," said David Brickman, executive vice president and head of Freddie Mac Multifamily. 

While millennials -- adults born after 1980 -- in particular have struggled to join the homeownership ranks, they aren't the only demographic who have taken more of a shine to renting.

More than 80 percent of baby boomers say renting is a more affordable option than buying, up 11 percentage points from a year ago. Over the same period, the share of Generation Xers who see renting as more affordable jumped nearly 20 points to 75 percent. 

The shift in attitude on renting versus buying may be a consequence of the housing crisis. According to an analysis of census data by the Pew Research Center, the number of homeowner households was flat between 2006 and 2016, a period that saw the total number of households in the United States grow by 7.6 million.

Meanwhile, the number of rental households in the U.S. increased significantly, from 31 percent in 2006 to more than 36 percent in 2016 -- the highest at any time since 1965. 

But a survey of 272,000 apartment residents by the National Multifamily Housing Council suggests renting may be as much a lifestyle decision as it is a financial one.

Nearly a quarter of respondents to the NMHC survey said they rent because it's more convenient and offers greater flexibility. That's compared to 18 percent who said they rent because they haven't yet saved enough for a down payment.

One group in particular -- baby boomers -- say they no longer want the hassle of homeownership. About 28 percent of that group said they rent to avoid the burden and cost of maintenance, compared to just 7 percent of renters 25 to 34 years old.

Still, many renters sense that homeownership is simply beyond their reach. The Freddie Mac survey found that most rents -- 57 percent -- believe home prices have increased, with six of 10 urban renters saying home values are greater than they were a year ago. And 52 percent of all renters said the tight supply of homes for sale is another factor that makes renting a good option.