20% down?!! Survey exposes how thin renters’ wallets are

The conventional wisdom about renters is that most of them would prefer to own their homes, and that many eventually will buy a house.

However, a survey of more than 25,000 adults—about one-third renters, two-thirds homeowners—found the renters to be more burdened by debt than homeowners and severely short of emergency savings. For many renters, a 20% down payment to secure a mortgage is a pipe dream; for some, even the government’s recent plan to bring back mortgages with 3% down payments might be a bridge too far.

The Financial Industry Regulatory Authority (FINRA), a nonprofit oversight organization authorized by Congress, conducted the study in 2012, and released its results last October. 

For more on the multifamily housing sector, read BD+C's Special Report: "5 intriguing trends to track in the multifamily housing game"

In 2012, 36% of Americans were renters. The survey found them to be younger than homeowners; only 39% were married, compared to 63% of owners. Nearly three-fourths of renters (74%) had household incomes below $50,000, compared with 41% of owners.

The survey found renters to be less educated, and nearly twice as likely to be unemployed or temporarily laid off, than owners. Forty-two percent of renters are minorities, compared with 29% of owners.

About one in four renters (24%) said they found it “very difficult” to pay their bills, versus 12% of owners. Nearly half of renters (48%) said paying their bills was “somewhat difficult,” compared to 39% of homeowners. 

Renters are burdened by a surfeit of debt. The survey found that renters were nine percentage points more likely than homeowners to carry credit card debt and nine percentage points more likely to carry student debt.

The difference was even more drastic for medical debt: 17 percentage points. (At the time the survey was taken, 68% of the renters said they had medical coverage, versus 85% of homeowners, but this was before the Affordable Care Act took effect.)

The scariest finding was that renters had practically no savings and live from paycheck to paycheck. Fifty-eight percent said they probably or definitely couldn’t come up with $2,000 in 30 days to cover an unexpected expense, compared to 29% of homeowners. Only 22% of renters (versus 50% of owners) said they had enough savings to cover three months’ expenses.