California renters aspire to purchase a home eventually, despite how expensive it is.
In fact, 50 percent of California renters rated homeownership as very important or extremely important, and 80 percent of renters want to own a home someday, according to a consumer survey released by the California Association of Realtors.
Renters see the advantages of homeownership as more than just a roof over their heads. Twenty-one percent of renters said homeownership would provide them with a good long-term investment, while 19 percent said it would give them the freedom to do what they wanted with their home. Twelve percent of renters said a benefit of homeownership would be having the stability to plant roots.
"It's encouraging that the majority of renters still believe buying a home is more than just a shelter over their heads," said Jared Martin, president of the California Association of Realtors. "While they may not be there yet, many renters are motivated to become homeowners as they recognize the many benefits."
Fully 45 percent of renters said they would purchase a home if they got a new job, a raise, or a promotion, while another 40 percent said they would be motivated to buy a home if they got married or were starting a family.
Renters who want to become homeowners someday are generally younger and more diverse. They have been renting a median of eight years and are at a median age of 35, with over half being millennials. Nearly three-fourths are non-white, and almost half are Hispanic. Renters who plan to buy have a median income of $40,000 and spend a median of 45 percent of their income on housing costs.
While many renters want to own a home, they either feel they are not in a financial position to become a homeowner or don't have the financial knowledge. Only 40 percent of renters are familiar with the credit and loan criteria needed to purchase a home.
Further hindering renters from becoming homeowners, many renters also don't know how much down payment is required, with 14 percent under the impression that more than a 50 percent down payment is needed for a home purchase. Nearly 40 percent of California renters believe that more than 20 percent is required to become a homeowner.
This misconception results in many renters delaying their home purchase or possibly even giving up on the dream of homeownership. California renters pay a median monthly rent of $1,300, but the cost of renting varies across the state. Renters who live in the Bay Area pay the highest rent at a median of $1,800, while those in Southern California pay a median of $1,390.
In general, renters spend 45 percent of their income on housing, with nearly seven in 10 spending more than the recommended 30 percent. The rent burden is especially heavy for the younger generations, with millennials spending half their income on rent. California renters have lived in their current home a median of three years but have been renting for a total of nine years.
While the majority of renters are unsure about how much longer they plan to live in their current residence, 25 percent plan to move next year. Around 66 percent plan to rent after moving from their current residence, with older generations more likely to continue to rent than younger ones. In a sign of optimism, 75 percent of those who plan to rent again said they want to own a home eventually.
