Surge In Housing Price Growth Expectations Dampens Home Ownership Prospects For Renters

Home prices soar while dreams of homeownership slip further away for many Americans.

According to a recent report from the Federal Reserve Bank of New York, renters are growing increasingly pessimistic about their ability to own a home, even as expectations for housing price growth reach near-record levels.

The 2024 SCE Housing Survey, part of the broader Survey of Consumer Expectations, reveals a surprising trend: the pace of expected home price growth over the next year has reaccelerated, reaching the second-highest reading in the survey’s history. However, expectations for home price growth over the next five years have slightly declined, suggesting that the current surge may be short-lived.

Renters are feeling the squeeze, with expectations for rental price growth notably higher than those for home prices. The survey found that 74.2% of renters believe obtaining a mortgage is somewhat or very difficult, and the self-assessed probability of ever owning a home has hit a new series low.

This sentiment is echoed by data from Redfin, which reports that home prices have been on an upward trend in all 50 of the most populous U.S. metros for the first time since July 2022. The median home sale price has risen to a near-record $383,188, up 4.8% year over year. Coupled with rising mortgage rates, this has driven the median monthly housing payment to a record $2,890, up 15% year over year.

Low-income Americans have been hit particularly hard, losing the homebuying progress they made during the pandemic. In 2022, only 20.6% of new mortgages went to low-income Americans, down from 23.2% in 2020, according to data from Redfin.

What It Means For Investors

While the current housing market may seem daunting for those hoping to buy a home, it presents a unique opportunity for real estate investors. The surge in expectations for housing price growth indicates that real estate remains a promising investment, with the potential for increased property values and capital appreciation.

Moreover, the growing demand for rental properties, driven by renters’ pessimism about homeownership, suggests that investors who focus on residential properties can capitalize on this trend. By providing quality housing options to renters, investors can generate a steady income stream while benefiting from the potential appreciation of their properties.

How To Invest

For the average person looking to invest in real estate, platforms like Arrived and Cityfunds offer accessible and diversified investment opportunities. These platforms allow individuals to invest in a portfolio of properties, rather than purchasing a single home outright, which can be a more affordable and less risky approach to real estate investing.

Arrived allows individuals to buy shares of single-family rental properties with a minimum investment as low as $100. Investors receive monthly dividends on the rental income while Arrived handles the property management responsibilities. Investors also benefit from the price growth as the property appreciates in value over time. Click here to view properties currently available to invest in on Arrived.  

Cityfunds offers investors the opportunity to invest in a diversified portfolio of home equity investments in top cities across the country. Through its innovative approach, Cityfunds allows individuals to tap into the $32.6 trillion home equity market, which has grown significantly in recent years. By investing in Cityfunds, individuals can benefit from the potential appreciation of property values and the payoffs generated from home sales or refinances. Click here to check out the cities you can invest in today.

Don’t Let Rising Home Prices Hold You Back

The current housing market may seem like a daunting obstacle for those dreaming of homeownership, but it doesn’t have to be. By investing in real estate through platforms like Arrived and Cityfunds, you can turn the tables and benefit from the very trends that are making homeownership more challenging.