Why Renters Can't Buy a Home: Debt, High Prices, and Saving Challenges

According to a recent survey, nearly one-third of U.S. renters are unable to purchase a home where they want to live, with debt and saving for a down payment being the most significant financial obstacles. Soaring home prices and rising rental costs are creating a challenging environment for aspiring homeowners, though a cooling housing market may eventually provide some relief.

What Are the Primary Financial Barriers to Homeownership?

The most common hurdle for renters is existing debt, such as credit card balances, student loans, and medical bills, which 45% of respondents cited as a barrier. This debt makes it difficult to save for a down payment—the initial, upfront payment made when purchasing a home—and can also complicate mortgage approval. Nearly as many renters (44%) reported that home prices are simply too high in their desired areas, while 38% said their income is insufficient to save for a home purchase. Only 12% of renters indicated that financial obstacles are not a factor.

How Do High Costs and Pandemic Setbacks Impact Buyers?

The housing market has become significantly less affordable since the start of the pandemic. Home prices have risen approximately 34%, and the number of available homes has decreased. Concurrently, the median asking rent has increased by 15% year-over-year, making it even harder to save. Nearly a quarter (23%) of renters reported that pandemic-related setbacks, like job or wage loss, have delayed their homebuying plans. This combination of high costs and personal financial strain places homeownership out of reach for many.

Is Renting Sometimes a Deliberate Choice?

While financial constraints are the main reason for renting, a portion of respondents choose to rent. Twenty percent said they have a favorable rental agreement, making it more cost-effective than buying in their current situation. Another 17% reported that they cannot find a home they actually want to purchase. This indicates that renting can be a strategic financial decision for some, rather than solely a forced compromise.

Why Are So Many Renters Being Forced to Move?

The survey also revealed that a significant number of renters are moving out of necessity, not by choice. While 29% are moving to upgrade to a better rental, 11% are being forced to move because their landlord is selling the property. Another 10% are moving due to inadequate utilities like heat, hot water, or electricity. Six percent are relocating because their lease was terminated by the landlord. These forced moves highlight additional instability within the rental market.

For renters aiming to buy a home, consider these steps based on our experience assessment:

• Create a detailed monthly budget that includes debt repayment as a fixed expense.
• Explore low-down-payment mortgage options like FHA loans, which can require as little as 3.5% down.
• Get pre-approved for a mortgage to understand your realistic purchasing power.