Increase in Millennials Planning to Rent, Unable to Afford Homebuying

More millennials say they are always planning to rent and have no homeownership aspirations.

This year, 12.3% of millennial renters said they plan to always be on a lease when it comes to housing, which is an increase of 1.5% from 2018, according to Apartment List. In Philadelphia, the average is slightly below the national one, as only 9.2% of renters plan to always remain that way. Demographically, ethnicity doesn’t seem to impact millennials’ renting vs. homebuying debate, with the exception of black millennials, in which only 8.7% don’t plan to buy.

What is leading more millennials away from homeownership? Not surprisingly, it’s affordability. Nearly 70% of those planning to always rent said they’re doing so because they cannot afford to buy a home, while 40% said they prefer to rent due to the flexibility. Twenty-eight percent said buying a home is financially risky. Of those that want to become homeowners, but are still renting, 70% said they haven’t bought because they cannot afford a home just yet.

What is the biggest hindrance? Most millennials (61%) cite the down payment, followed by 38% who said bad credit and 29% who said the monthly payments. In fact, nearly half of millennial renters have nothing saved for a down payment, while 31% have less than $5,000. Only 21% have more than $5,000 saved for a down payment. Of those with family support for housing costs, millennials reported expecting less this year than last year.

In Philadelphia, 42% of millennial renters reported they have not yet begun saving for a down payment, and only one-third will be able to have a 10% down payment ready over the next five years.