American Dream CRUSHED – SCE Housing Survey Reports Renters’ Hopes of Owning a Home Sinks to Historic Low

The Federal Reserve Bank of New York’s 2024 SCE Housing Survey of Consumer Expectations paints a disappointing picture of the future of homeownership in America. The survey highlights the growing anxiety over escalating housing expenses, especially among renters who see their aspirations of homeownership slipping away.

As a result, renters’ confidence in the ability to ever buy a home was reported at a record low of 40.1%.

Survey Indicates Homeownership Appears to Be More Unattainable Than in Previous Polls

The SCE Housing Survey brings to the surface what Americans have seen progressing for the past few years. Currently, many potential homebuyers find themselves drowning in financial hardships with no end in sight. As they strive to earn more to save for a home, today’s economy pushes back, placing extreme financial strains on their wallets, bank accounts and retirement savings. This presents a dreary outlook for those who would like to obtain a mortgage to buy their dream home.

Home Prices Expected to Keep Rising Pushing Ownership Further Away

According to the survey, participants are bracing for a substantial rise in home prices, expecting an average increase of 5.1% within the next year. This projection far surpasses the modest 2.6% rise that was anticipated a year ago. However, the long-term view seems slightly less disappointing, with a forecasted 2.7% increase in home prices five years from now, down from only 2.8%, which is what was predicted in the last annual survey.

SCE Housing Poll Reveals Renters Feel Locked Out of Market by High Mortgage Rates

An unsettling aspect of the housing survey by SCE is that the participant’s predictions for future mortgage rates are that they are expected to soar to unmanageable levels. Survey participants forecast the average mortgage rate to climb to 8.7% within a year and escalate further to 9.7% in three years. These projections exceed the current average 30-year fixed mortgage rate of 7.22% reported by Fannie Mae.
Related Article: Record High Mortgage Rates for 2024 Drive Up Demand for Rental Properties

Tenants Staying in Place Even While Rents Continue to Climb

The rental market is not spared from the wave of increases. This was made clear in the SCE Housing Survey when respondents predicted a steep 9.7% jump in rental costs a year from now, nearing the highest forecast in the survey’s history. Over a five-year horizon, the expected growth in rent appears to moderate, settling at an increase of 5.1%.
Related Article: The Driving Factors Behind the Ability to Charge Higher Rental Rates

Families Living Out The American Dream in Residential Rental Properties

The financial roadblocks to getting into a home are concerning for renters who see rent prices increasing while their income remains stagnate. In addition to this, individuals who do have the financial capacity to purchase a new home are often stopped by the sparse market we’ve been experiencing that offers a limited number of homes.

These facts are unsettling for many, as owning a home has always been the main component in achieving the American Dream. In a LendingTree survey taken last year, it was found that 94% of consumers felt that owning a home is part of the American Dream.

Although unable to buy a house, renters are getting a small slice of the American pie by living in a rental home. Rental properties offer families the same amenities as a home, but without the cost of homeownership.

Related Article: Report States Renting More Affordable Than Buying Indicating Financial Security for Investors

SCE Housing Survey Stats

Summary of related stats directly from the 2024 SCE housing questionnaire
conducted in February:

• Households expect home price growth to increase to 5.1 percent over the next twelve months, up from 2.6 percent a year ago. This is their second highest reading in the survey’s history, but below the series high of 7 percent in 2022. Expectations over the five-year horizon declined by 0.1 percentage point, with households anticipating average annualized price growth of 2.7 percent.
• Households expect rents to increase by 9.7 percent over the next twelve months, compared with 8.2 percent in February 2023, reversing last year’s decline.
• Renters put the probability of ever owning a home in the future at 40.1 percent, a decrease from 44.4 percent a year ago, reflecting a series low.
• Households expect mortgage rates to rise to 8.7 percent a year from now and 9.7 percent in three years’ time, both numbers a series high.
• Homeowners’ expected probability of refinancing in the next year rebounded slightly to 6.3 percent from 4.1 percent last year.

Rental Properties Preserve the American Dream of Living in a Home

With inflation, home prices skyrocketing, and mortgage rates not coming down, along with the fact that there’s a limited amount of properties on the market, the journey toward homeownership is becoming increasingly challenging. The SCE Housing Survey reflects this with its finding that there’s been a significant shift in homeownership aspirations. People are turning their focus to rental homes where they can reside in a house to capture some of the American Dream.

This presents the opportunity for investors to jump into a market that boasts a high demand for rentals. Additionally, with property prices projected to increase, investing now could result in significant savings on the purchase price. On top of this, securing a piece of real estate sooner rather than later allows investors to benefit from rising home values because it can quickly boost equity.

For those who would like to take action and secure a new construction rental property before home prices escalate further, book a call with Morris Invest to discuss how to make it happen. In the meantime, you can learn more about the benefits of new construction rental properties, as well as the Morris Invest and SDIRA programs that are offered.
Morris Invest provides clients with access to high-quality, build-to-rent rental properties, and enables the buyer to take advantage of bulk pricing which can save them thousands of dollars in the process. Additionally, a cost segregation analysis is included, which can result in significant tax benefits for the investor. If all this has sparked your interest, feel free to schedule a complimentary phone call with the team at Morris Invest.

Before you go, dive into the following video that goes into detail on how the American Dream is falling apart:

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