The biggest factor deterring renters from making the plunge into home ownership is not the fear of falling property values, but that they simply can’t afford to buy, according to a Bankrate Inc. poll released Monday.

In a nationwide poll of 1,004 adults taken this month, less than 2 percent of renters said fear of falling prices was keeping them out of the market.

The National Association of Realtors has maintained that consumer psychology contributed to the housing slowdown that began in 2006. NAR launched a nationwide advertising campaign in November aimed at boosting buyer confidence, proclaiming, “It’s a great time to buy or sell a home.”

According to the Bankrate poll, affordability is the single biggest issue cited by renters who were asked what, if anything, was holding them back from buying a home today. Nearly 40 percent of renters polled nationwide said they could not afford a home, with price being an even bigger issue in the Northeast (49 percent) and western states (48 percent).

From 2001 to 2005, home prices appreciated at about 9 percent per year nationwide, and even faster in most areas outside of the Midwest. Although price appreciation has slowed or reversed in some markets, only 13 percent of renters surveyed by Bankrate said they plan to buy a home soon.

The Bankrate survey, conducted by GfK Roper Public Affairs & Media, found that the second-most cited obstacle to home ownership for renters was a lack of financing. Just under 12 percent of those polled nationwide said their credit wasn’t good enough to buy a home. Almost 21 percent of renters in the South said they couldn’t finance a home purchase.

A March 20 Banc of America Securities LLC report predicted that tightened lending standards in the wake of the subprime lending crisis will cut demand for homes by 15 percent this year, and depress prices by 5 percent.

Some 57 percent of homeowners with mortgages surveyed by Bankrate said they had fixed-rate loans, and another 9 percent reported having adjustable-rate mortgages. The remaining 34 percent said they didn’t know what kind of mortgage they had — a statistic Bankrate characterized as “staggering” in a press release.

“Clearly, many homeowners are uninformed about their mortgages,” Greg McBride, senior financial analyst, said in a statement. “With interest rates stabilizing, it’s a very good time to assess whether they should refinance or not.”

Other poll results:

  • Homeowners with ARMs were asked what they planned to do when their loan payments readjust. Although 36 percent said they planned to refinance to a fixed-rate loan, nearly as many — 34 percent — said they didn’t know what they would do. About one in four said they didn’t plan to have the loan when it reset.

  • Asked how often they worry about their ability to afford their mortgage payments next year, 70 percent of homeowners said rarely or never. About 15 percent said they “regularly” worry, and 13 percent said “sometimes.”

  • Among renters, 29 percent said they would avoid interest-only loans. While 20 percent expressed an aversion for payment-option ARMs, even more — 24 percent — said they would avoid a fixed-rate loan.

Show Comments Hide Comments


Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription