With reports of new coronavirus cases continuing to grow and some states reversing course on re-opening, the COVID-19 pandemic continues to upend the United States economy in an unprecedented fashion. New data from apartment rental website RentCafe has quantified yet another of the outbreak’s impacts: For 43% of renters ready to buy, the pandemic has, at least for now, hindered the path to homeownership.
RentCafe’s survey, conducted at the end of May, polled nearly 7,000 renters on their housing plans before and after the coronavirus hit. Asked how their housing plans have changed because of the pandemic, 43% responded that they had reconsidered buying a home in 2020. Notably, 50% of older millennials answered that they had reconsidered a home purchase this year, representing a significant detour for half of one of the current market’s driving demographics.
Three other age cohorts — younger millennials (43%), Gen Xers (42%) and Gen Zers (40%) — had shares of 40% or more respond that they had reconsidered purchasing a home in 2020. Baby Boomers indicated the least concern, with just 37% rethinking a potential home purchase this year.
“As a generation that has already weathered financial uncertainty with previous economic crises, a considerable percentage of them are decided to find their footing amid financial uncertainty and not let current events stop them from owning a home,” wrote researcher Florentina Sarac on RentCafe’s blog.
The reversal represents a big change of plan for many renters, many of whom had initially planned to buy this year. Eleven percent of survey respondents indicated that their housing plans at the start of 2020 were to buy a home, including 14% of older millennial renters and 15% of Gen X renters.
Of the prospective home buyers who did change their purchasing plans, 43% cited economic uncertainty as the main cause for their decision — highest among reasons given by respondents, followed by loss of income.
And while that uncertainty may wane once the country fully rebounds, the pandemic may have yet another longer-term effect on the residential real estate market: Almost a quarter or renters now believe they will never buy a home.
While 56% remained optimistic about buying in the next five years, 23% said that they are never buying. Half of boomer renters conveyed no intention of switching from renting to buying, following a trend that has seen renter households grow by 43% over the past decade.
“When it comes to the complexities of real estate investment, personal finances, and future economic time horizons, the conventional wisdom of buying being better than renting does not always hold true,” said Doug Ressler, manager of business intelligence at Yardi Matrix. “Many renters don’t think that they’ll ever own a home because they might not afford additional expenses that come with this decision, such as interest, property taxes, insurance, and maintenance for the entire ownership period. On the other hand, renting consists only of monthly rent and a possible one-time deposit; therefore economically, renting might make more sense than buying a home.”
“Considering the survey results, it’s safe to say that the pandemic has had a real effect on the housing plans of most people,” said Sarac. “The general tendency is to avoid taking many risks during this period of uncertainty and to choose a more economically safer approach. This is clear across all generations, despite some of them showing more stoicism than others.”