Uncovering the struggles faced by Americans in achieving homeownership
According to a survey conducted by Divvy Homes, two out of five Americans believe that winning the lottery is their only chance at becoming homeowners. The survey, conducted among 2,000 current non-homeowners, revealed that only 53% of respondents have any confidence in their ability to own a home in the future.
In addition to the 40% who would rely on winning the lottery, 26% feel they would need to inherit money, and 19% believe they would have to marry someone wealthy to reach their dream of homeownership.
On average, Americans estimate that it would take them between three to four years to afford a home, while 20% believe that homeownership will never be within their reach.
The survey also found that 57% of non-homeowners would struggle to afford a house in their current neighborhood.
Despite these challenges, 67% of respondents remain hopeful about the possibility of owning a home, while 12% describe themselves as hopeless, 19% as frustrated, and 11% as desperate.
The survey also highlighted the impact of market dynamics and rising interest rates on potential buyers. While 52% perceive the current housing market as unstable, 46% believe it will stabilize within the next two to five years, while 17% think it will never return to a stable and affordable state.
Respondents estimate that they would need an average annual income of $76,000 to afford a starter home, with a minimum of $45,000 in savings for the downpayment. The ideal downpayment size, according to respondents, would be 8% of the overall purchase price, making their ideal home worth just under $570,000.
To get closer to their homeownership goal, 44% of respondents are willing to take on a second job or side gig.
Among those hoping to buy a home in the next few years, affordability of monthly payments (69%), the right size of the home for present and future needs (39%), and an ideal location for their family (37%) are key priorities. However, 56% of respondents believe they would be denied if they applied for a mortgage at present.
“Potential buyers are looking for alternatives to traditional mortgage financing or are stuck waiting for a reprieve from the rising rates and prices that keep so many of them renting and locked out of homeownership,” said Adena Hefets, co-founder and CEO of Divvy Homes.
“There are so many factors putting downward pressure on a potential homeowner’s buying power - high interest rates, a lack of supply, increasing cost-of-living - that the starter home seems to be on the verge of extinction.”
The survey also revealed concerns among renters, with 47% worried about rising home prices before they can afford to buy. Additionally, “throwing money away on rent” (46%), uncertainty about long-term housing stability (41%), and the impact of rising interest rates (34%) were identified as the biggest drawbacks to not owning a home.
“The traditional mortgage process was designed in the 1940s when the norm was a single breadwinner with a steady W-2 income. The system hasn’t changed, even though the way we work, live and form families is dramatically different. But today’s younger buyers often lack long periods of income history and are increasingly non-salaried, working as a 1099 contractor, gig worker, or self-employed individual,” Hefets said.
“A majority of aspiring homebuyers feel that homeownership is always just beyond their reach, that the ‘American Dream’ of homeownership is slipping away, and that it would take luck, extraordinary circumstances, or a serious change in the mortgage process to make it possible for them to own a home in today’s economic climate.”
