We keep hearing that many consumers are ready to enter the homebuying fray, but new analysis casts doubt on that sentiment.
Fewer and fewer Americans are planning on purchasing a home, according to a new survey from Gallup.
Gallup’s study, which sampled the homebuying expectations of non-homeowners, found that 41 percent do not plan on buying a home in the “foreseeable future,” a surprising jump from 31 percent in 2013; furthermore, just 7 percent of non-homeowners expect to buy in the next year, down from 8 percent in 2013.
Here’s a chart breaking down Gallup’s findings:
Gallup’s findings reinforce a point we’ve made again and again on these pages, and one we reinforced in a recent appearance on Ilyce Glink’s “Big Money Real Estate” program – despite the fact that homeownership has rarely been more appealing and beneficial, wider economic trends are limiting the number of Americans who can take advantage of those benefits.
“It has been a closely held belief for many in the U.S. that owning a home is a key to eventual personal prosperity,” Gallup stated. “But the Great Recession of 2007-2009 may have changed Americans’ ability to act on that belief.”
A Stark Decline in Homeownership
Mirroring the decline in homebuying zeal has been a stark decline in homeownership, and an equally striking increase in renting. According to Gallup’s metrics, the share of Americans who own their primary residence has fallen from 73 percent in 2007 to 61 percent this year (the lowest in 15 years), while the share who rent has risen from 22 percent in 2007 to 34 percent today (a 15-year high).
Here’s a graph showing that progression:
There are two conclusions that one can draw from Gallup’s analysis: one, that with inequality and economic uncertainty remaining high, fewer consumers are considering homeownership; or two, that we’re entering a “new normal,” one where more Americans rent and where homeownership remains lower than historical averages.
Housing, as we’re repeatedly asserted, remains dependent on the wider economic recovery, and until we see movement on wages and incomes, it’s difficult to see consumer sentiment budging.