According to a Federal Reserve analysis, U.S. households surveyed during October 2014 reported only modest improvements with respect to economic well-being but felt increasingly optimistic about the future.
- 74% of homeowners reported “doing okay” or “living comfortably,” in contrast to only 48% of renters
- 10% of respondents reported living with parents, compared to 5% who are living with a roommate
The report details a number of motivations for renting a home, including challenges associated with attaining homeownership:
- 81% of renters indicate that they would prefer to own if they could afford to do so
- 50% of renters reported that they lack the funds for a downpayment
- 31% of renters noted that they could not qualify for a mortgage
- Among other reasons for renting:
- 27% of renters revealed it was cheaper for their household
- 25% thought renting was more convenient
- Only 12% preferred renting
- 9% of current renters are actively looking to buy a home
There were noticeable differences among income classes for reasons to rent:
- For renters earning less than $40,000 a year:
- 35% reported they were unable to qualify for a mortgage
- 52% indicated that they could not amass a downpayment
- For renters earning more than $100,000 a year:
- 39% believed renting was more convenient
- 17% preferred renting to owning
- 29% planned on moving in the near-term
There were also differences across age classes:
- For renters ages 18 to 29:
- 36% plan on moving soon
- 13% were looking to buy
- For renters above age 60:
- 35% found it cheaper to rent
- 26% preferred renting over homeownership
Among homeowners, the median tenure of homeownership was 12 years. As to reasons for owning a home:
- 44% said ownership allowed building home equity
- 20% liked the certainty associated with costs
- All total, 67% of homeowners preferred owning for financial reasons
- 83% also cited at least onenonfinancial reason
- 72% simply preferred to own
- 43% noted there are fewer rules and more ability to customize their residence
- 23% revealed they did not like moving
Most homeowners expressed optimism regarding home values:
- 43% thought their home gained value over the prior year
- Only 6% believed their home would lose value over the next year
The survey found that 14% of mortgage holders reported owing more than the value of their home however.
The survey also provided another data point concerning sources of downpayments. For buyers purchasing between 2011 and 2014:
- 52.6% used personal savings
- 29.3% used equity from a previous home
- 15.3% used a loan/gift from family/friends
Because the survey followed-up on an earlier 2013 study, additional year-over-year findings were also available:
- Only one-third of renters in 2013 who noted they were looking to buy actually purchased a home (and only 3% of renters who reported not looking in turn made a purchase)
- Among households who transitioned to renting, many viewed it as a short-term situation
- 26% of new renters who owned a home in 2013 were looking to buy
- Among renters who previously owned a home, only 17% reported renting was more convenient
In terms of non-housing findings, households had modest expectations:
- 65% of households noted they were doing “okay” or living comfortably”
- 49% of part-time workers preferred to work more hours at their current wage
- 29% of households expected income growth in the coming year (compared to only 21% in 2013)
The Federal Reserve analysis stated that households faced fragile economic conditions, with 47% of survey respondents stating that they could not cover an emergency expense of $400. One-fifth of households revealed that their spending exceeded income over the prior year. 23% of adults also reported having student loan debt.
With respect to retirement, 39% of currently non-retired households noted thy have given no or little thought to financial planning and 31% had no savings or pension.