The FINANCIAL — Roughly half of U.S. adults who currently do not own a home, 49%, say they will buy a home within the next five years, up slightly from recent years. An additional 20% say they plan to purchase a home in the next 10 years, leaving just 28% who expect to remain renters or in other living arrangements for the foreseeable future.
The results are based on interviews with 502 non-homeowners in a March 9-29 Gallup poll. They indicate that a majority of this group plans to buy homes in the near future, including 10% over the next 12 months, 39% in the next five years and 20% within 10 years.
The U.S. housing market has largely recovered from the severe downturn that occurred after the housing bubble burst in the mid-2000s. Gallup recently reported that 61% of Americans expect housing prices in their area to increase in the coming year, the highest percentage making that prediction since 2005.
One reason prices are rising is that housing supply is not keeping up with demand in many markets. The limited number of properties for sale often receive multiple bids from the large number of families seeking houses. That dynamic is raising concerns that certain markets may become overheated, according to Gallup.
The poll results indicate that housing demand will remain strong. Of course, financial realities such as having a stable source of income, having enough money for a down payment and the availability of affordable housing may hinder those intentions from becoming a reality.
Most non-homeowners aged 55 and older do not plan to buy homes in the near future, but most younger adults do. Fifty-eight percent of those aged 35 to 54 expect to buy within the next five years, as do 52% of those aged 18 to 34. An additional 31% of 18- to 34-year-olds plan to buy within the next 10 years, leaving only 14% in this age group not thinking of buying a home in the next decade.
Southern residents’ buying intentions within the next five years exceed the national average, while Eastern residents’ intent is below average — although the results are not conclusive because of limited sample sizes.
Homeowners Largely Expect to Stay Put
Most U.S. adults who own their home, 64%, do not think they will sell it for the foreseeable future. On the other hand, 20% expect to sell within the next five years, including 4% in the next year, while 13% plan to sell within the next 10 years. These results are nearly identical to what Gallup found when it previously asked this question in 2013.
The data suggest that younger homeowners may be more inclined than older homeowners to sell their home in the next five years.
Homeowners sell their homes for a variety of reasons, most commonly because of a change in life circumstances — a new job, having children or after grown children move out of the house. About half of U.S. homeowners who plan to sell their home within the next 10 years, 49%, are looking to downsize — saying they plan to buy a smaller or less expensive home than they have now. Roughly three in 10 say they are looking to buy a bigger or more expensive home. Most of the rest, 13%, indicate they will rent a new place to live.
These results are also similar to what Gallup measured four years ago.
Consistent with what one might expect, older homeowners planning to sell are more likely to say they will buy a smaller and less expensive house, while younger homeowners are more likely to be looking to purchase a larger home.
Homeownership remains an aspiration for the vast majority of Americans who do not currently own a home — about seven in 10 non-homeowners expect to buy a home within the next 10 years. This indicates that the market for real estate sales should remain strong.
However, these results also indicate that demand for homes may not keep up with supply. A higher percentage of non-homeowners plan to buy homes in the next five years than homeowners plan to sell homes. The two percentages do not need to match for supply to equal demand because there are roughly three homeowners for every two non-homeowners. At the same time, most homeowners who sell their home will also need to find a new place to live, further adding to the demand for real estate.
Some of the shortfall in housing supply can be made up by new construction, which might indicate a construction boom is on the horizon, if not already underway. But if real estate demand continues to outpace real estate supply, home prices will continue to rise and could rise beyond what most Americans can afford. To the extent that happens, many would-be homeowners may not be able to achieve their goal of owning a home.