The dream of owning a home is fading fast for millions of Americans, especially renters. According to a new New York Federal Reserve Survey, just 33.9% of renters think they’ll ever own a home. That’s the lowest figure since the survey began a decade ago, and it reflects a steady decline in optimism that began in 2016.
Renters Still Prefer Owning, But Fewer Think It Will Happen
While most renters still want to own a home—72% say they prefer it over renting—many now see that goal as out of reach. Back in 2014, renters thought they had a 53% chance of buying a home someday. Today, that number is barely above one in three.
So, what’s changed? For one, high mortgage rates are sticking around. Survey respondents expect 30-year mortgage rates to stay around 7% for the next three years. That’s the highest forecast ever recorded in the New York Federal Reserve housing survey.
“Housing affordability is near its lowest level in three decades, and many buyers have been priced out of the market,” Matthew Walsh, an economist at Moody’s Analytics, told Investopedia.
Home Prices and Rents Keep Rising
It’s not just mortgage rates. Home prices are expected to climb another 4% over the next year, according to the survey. Rents are expected to rise even faster—by 8% over the next 12 months.
That creates a double burden for renters: it’s getting more expensive to rent, and saving up to buy is becoming harder.
Meanwhile, a separate report from Realtor.com shows the U.S. is short 3.8 million homes. That shortage is keeping prices high and making it harder for first-time buyers to enter the market. Builders are working to catch up, but at the current pace, it would take more than seven years to meet demand.
Zoning Laws Make It Harder to Build
One major reason for the housing shortage? Zoning laws. Many cities have rules that limit the construction of anything other than single-family homes. These restrictions block developers from building more affordable options like duplexes, townhomes, or small apartment buildings.
“We’re still years away from a normal, healthy housing situation,” Robert Frick, corporate economist at Navy Federal Credit, told Investopedia. Union.
Some economists say loosening zoning laws could result in more affordable homes. Others argue the changes could bring unintended consequences and don’t guarantee widespread affordability.
Andrew Mikula of the Pioneer Institute warned, “Except in Boston and Cambridge, most of these policies have produced a paltry amount of affordable housing.”
For now, it’s clear many renters are stuck between rising rents, high mortgage rates, and a shrinking pool of affordable homes—and it’s making the American dream of homeownership feel more out of reach than ever.