When analyzing the residential housing market, it is easy to focus on individuals and families that are already homeowners. Whether they are trying to move into an existing home or build an entirely new home from scratch, these homeowners make up a large part of the market.
That being said, there is an entirely separate cohort of individuals and families that are looking for homes. This cohort is extremely interested in homeownership, yet these non-homeowners haven’t yet made the investment for both economic and non-economic reasons. While they may currently be standing on the sidelines, realtors can capitalize by offering their services when these non-homeowners are ready to make the leap.
For this reason, it is insightful to review some data about non-homeowners from the Aspiring Home Buyers’ Profile. Created by the National Association of REALTORS Research Department, this homeownership study provides some insightful data on this important cohort.
Key Findings From the Homeownership Study
As a starting point, it’s important to define the term “non-homeowner.” The good news is that the definition is straightforward. For this study, a non-homeowner is someone who (1) rents their home or apartment or (2) lives with family or friends and does not pay rent. It’s important to keep this definition in mind as we review the findings from the study.
To understand this homeownership opportunity set, we need to look at some macro statistics. 63% of the study’s respondents were deemed homeowners and 37% were non-homeowners. From that 37%, 28% of non-homeowners were renters. The remaining 9% were individuals who lived with someone else (like friends or family members). It goes without saying, but this 37% is a huge subset of people that may be interested in future homeownership.
Digging deeper into that 37% of non-homeowners, the study shows that many of these non-homeowners are younger. Specifically, 46% of those non-homeowners are 34 years old or younger. Essentially, they are Millennials or Gen Z’ers. There is also important economic and demographic information in this cohort of non-homeowners. 57% have an income of less than $50,000 and 41% live in suburban areas.
While these macro statistics are important, what is arguably more important is the motivation behind homeownership. According to the study, one of the most important motivations is much deeper than homeownership as an investment or as a way to live more comfortably. It is all about pursuing the American Dream. 80% of non-homeowners said that homeownership is part of their American Dream. For current homeowners, that number rose to 90%.
Homeownership represents that deep, visceral feeling of being successful in one of the greatest countries in the world. Real estate professionals should keep this in mind as they are working with non-homeowners who want to live out their versions of the American Dream.
Achieving Their Homeownership Dreams
In sum, homeownership continues to be a dream for many non-homeowners. Even though they may not be making their purchases right now, it is vital to pay attention to this important cohort. By doing so, you can be well-prepared for the moment that these non-homeowners want to become homeowners.