By Adena Hefets – Updated June 27, 2023
What would you need to do to become a homeowner?
Home affordability is so out of reach right now that two out of five Americans think they’d need to win the lottery to become homeowners.
That’s according to a recent survey conducted by Divvy of 2,000 current non-homeowners. Of respondents, only 53% are confident in any way that they’ll be able to own their own home someday.
In addition to the 40% who think hitting a lottery jackpot is their best chance at home ownership, one in four (26%) believe they’d need to inherit money from someone in order to ever own a home. One in five (19%) even said they’d have to marry someone rich.
When do you think you could afford a home?
Overall, the average American thinks it would take them between three and four years to afford a home – and a third believe it would take them five years or more. Another 20% expect that they’ll never be able to afford one.
The survey also revealed that almost six in 10 (57%) non-homeowners would find it difficult to afford a house in their current neighborhood. Despite that, 67% are still hopeful about the possibility of one day owning a home – more than five times as many as the number of people who actively described themselves as hopeless (12%). Another 19% describe themselves as frustrated, and another 11% feel desperate.
The changes in market dynamics and rise in interest rates are weighing heavily on would-be buyers. While over half (52%) believe the current housing market is unstable, 46% believe that things will level out within the next two to five years. 17% feel the market will never return to stable, affordable levels.
Respondents think they’d need to make an average of $76,000 a year to afford a starter home, and that they’d need at least $45,000 in savings to afford the down payment on a starter home. Nearly half of respondents (44%) are willing to get a second job or side gig in order to get closer to their goal of homeownership.
What do you think your ideal down payment size should be?
The ideal down payment size would be, on average, 8% of the overall purchase price, which would make their ideal home worth just under $570,000.
What parts of homeownership would you prioritize?
Those that dream of being able to buy a home in the next few years prioritize affordable monthly payments (69%), the home being the right size for now and the future (39%), and the location being ideal for their family’s needs (37%).
However, 56% think they’d be denied if they tried to apply for a mortgage right now.
“Potential buyers are looking for alternatives to traditional mortgage financing or are stuck waiting for a reprieve from the rising rates and prices that keeps 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.”
What are some of the biggest drawbacks of not owning a home?
Out of those respondents who currently rent, 47% worry about home prices getting more and more expensive before they can afford to buy. “Throwing money away on rent” was also considered one of the biggest drawbacks to not owning a home among 46% of respondents, in addition to feeling uneasy about the stability of their long-term living situation (41%) and watching interest rates rise before they can afford to buy (34%)
Affordability is an overall problem: 63% of respondents said they often struggle to make ends meet, most commonly because of the high cost of living (69%) and rising inflation (56%).
“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 added. “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.”
This random double-opt-in survey of 2,000 non-homeowners was commissioned by Divvy Homes between June 5 and June 7, 2023. It was conducted by market research company OnePoll, whose team members are members of the Market Research Society and have corporate membership to the American Association for Public Opinion Research (AAPOR) and the European Society for Opinion and Marketing Research (ESOMAR).
Adena is the co-founder & CEO of Divvy Homes, a proptech company on a mission to make homeownership accessible to everyone. Divvy was named a Time100 ‘Most Influential Company’ in 2022. Prior to founding Divvy, Adena joined Square in 2013 and was responsible for building out Square Capital, a merchant cash advance platform with billions in loans outstanding. Prior to joining Square, she was part of the large-cap buyout team at TPG, a private equity firm, where she helped purchase companies in the real estate sector. She started her career as an investment banker at Merrill Lynch.
Adena holds a Bachelors of Science, Policy Analysis and Management from Cornell University and a Masters of Business Administration, Stanford Graduate School of Business. She was named 40 Under 40 by Fortune and is backed by Andreessen Horowitz, Tiger Capital, and Caffeinated Capital. She currently lives in Oakland, California.