Board of Governors of the Federal Reserve System

Housing and Household Living Arrangements

Recognizing the importance of housing to one's overall well-being, the survey considers several aspects of individuals' housing situations, including the motivations behind some young adults opting to live with their parents, the reasons why people own or rent their homes, and the experiences of those who rent. In doing so, it observes the extent to which some renters--and especially black and Hispanic renters--encounter housing difficulties such as eviction or struggling to get repairs completed.

Living Arrangements

Approximately 14 percent of respondents report that they live alone. Just over half live with only their spouse or partner and children under age 18. Thirteen percent of adults indicate that they live with their parents, 10 percent report living with an adult child who is not in school, 10 percent report living with extended family members, and 6 percent report living with one or more roommates (table 18).

Table 18. Which of the following types of people are you living with?

Among young adults ages 25 to 29, just under a quarter (24 percent) report that they live with their parents (table 19). The likelihood of living with one's parents is greatest among Hispanic young adults, as one-third of Hispanics between ages 25 and 29 live with their parents--which exceeds the 19 percent of whites and 26 percent of blacks in their late 20s who do so.

Table 19. Reasons for living with parents and desire to live alone among young adults (by age)

Percent

Overwhelming majorities of these young adults who live with their parents do so to save money. But among people who are in their late 20s or in their 30s who live with their parents, about 40 percent are doing so in part to provide financial assistance to their parents or others living with them, and many are doing so at least in part to either provide for sick or elderly relatives or to receive assistance with child care.

Exploring this decision to live with parents in another way, the survey considers whether these young adults could afford to live on their own in their current neighborhood and whether they would prefer to.³⁰ Fifty-three percent of young adults in their late 20s living with their parents say they would prefer to live alone but cannot afford to in the same neighborhood. But one-third could afford to live alone if necessary, and an additional 13 percent prefer their current arrangement despite being unable to afford living independently. Hence, this suggests that the reasons for living with one's parents are not uniform and may reflect a wide range of preferences and circumstances.

Reasons for Renting or Owning

In addition to considering who people live with, the survey asks respondents whether they own or rent their current residence and the reasons for that choice. Sixty-one percent of adults report that they and/or their spouse or partner own their home, while 28 percent rent and 11 percent neither own their home nor pay rent.³¹ As shown in table 20, homeownership rates increase with both the age and income of respondents.

Table 20. Housing tenure (by age and family income)

Percent

Both owners and renters are also asked what contributes to their tenure choice. Among renters, half report that they rent because they cannot afford the down payment for a home purchase and 30 percent indicate that they cannot qualify for a mortgage (figure 19). Since respondents can select multiple reasons for renting--and many of those who cannot qualify for a mortgage also cannot afford a down payment--a combined 57 percent of renters report that one or both of these mortgage access factors contribute to their decision to rent. Nevertheless, many renters indicate that either the perceived benefits of renting or the perceived risks of homeownership contribute to their decision. For example, 28 percent of renters opt to rent at least, in part, because it is more convenient, 23 percent do so because they believe it is cheaper than owning, and 22 percent do so because they feel that owning a home is a bigger financial risk.

Among homeowners, the most commonly cited reason for owning is that it is perceived to be a good investment, which is included as a reason by 72 percent of homeowners (figure 20). Many owners also indicate other financial reasons for homeownership, including that they believe it is cheaper to own than to rent (46 percent), they are building equity with payments (43 percent), and the certainty about monthly payments (23 percent). There are, of course, non-financial reasons that people own as well. Sixty-nine percent of owners say that they simply prefer to own, 45 percent do so because there are fewer rules and they can customize their house, and 27 percent do so because they do not like to move.

Considering the reasons for owning or renting across geographic areas, in general there are not substantial differences for those living in urban areas relative to those in more rural communities. One exception, however, is that urban owners are more likely to report that they own because they believe it is a good investment than are owners in more rural areas. Seventy-three percent of owners in urban areas report that they own, at least in part, because it is a good investment, which compares to 65 percent of rural owners who do so. Conversely, renters in rural areas are somewhat more likely to indicate that they rent due to the financial risks of homeownership. Twenty-seven percent of such renters indicate that the financial risks involved with homeownership contribute to their tenure decision, whereas 21 percent of urban renters say that this concern factors into their decision.

Experiences of Renters

The SHED considers several experiences of renters, including any recent evictions, the rental application process, and their interactions with their landlord.

Individuals who moved from one rental unit to another--or to a home that they neither own nor rent--within the two years before the survey are asked a series of questions probing whether their most recent move resulted from an eviction or the threat of an eviction.³² Nine percent of these recent movers indicate that their most recent move came because they were evicted; received an eviction notice; were told by their landlord that they had to leave; missed a rent payment and thought they would be evicted if they did not move; or the property they were renting was condemned (collectively referred to here as "eviction or the threat of eviction"). The likelihood of moving due to an eviction or the threat of an eviction is somewhat higher among black and Hispanic renters, with 12 percent of black renters and 16 percent of Hispanic renters who moved in the previous two years indicating that they moved for these reasons (table 21).

Table 21. Moved due to an eviction or the threat of an eviction (by race/ethnicity)

Percent

Renters who moved, but not due to an eviction or the threat of an eviction (and not due to a foreclosure if previously a homeowner), are also asked about the factors that contributed to their decision to move. Among those not moving due to an eviction, 31 percent moved in order to reduce housing expenses, including saving money or avoiding a rent increase at their previous apartment (table 22). More common are moves toward a better house or neighborhood, which are collectively cited by 49 percent of those not moving due to an eviction. Finally, 44 percent moved at least in part due to changes in life circumstances, including a change in family status or a relocation to a new city.

Table 22. Reasons reported by renters for moving to their current home

Recent movers also provide information on their experiences when signing a lease for a new house or apartment. Renters are commonly asked by their landlord to pay a security deposit, which was required of just over four-fifths of people who moved to a new rental unit in the previous two years. Nearly as common were requests for documentation of employment or income, which 70 percent of renters were required to provide. Approximately half of renters received requests for a credit check (54 percent), the payment of an application fee (52 percent), personal references (49 percent), or a criminal background check (46 percent). The survey cannot determine, however, the fraction of landlords who acted on the request for permission to run these background and reference checks. It also does not consider the extent to which individuals avoided rental units with background checks that they would not pass or those with application fees and deposits that they could not afford.

Among all renters, whether they recently moved or not, the survey explores the responsiveness of landlords to problems with the home. Forty-nine percent of renters indicate that in the prior year, they reported at least one problem to their landlord that they felt needed to be fixed, such as a leak or a broken appliance. Renters who have a monthly rent above the median rent of $775 are somewhat more likely to have reported a problem to their landlord that they felt warranted repair. But the likelihood of getting the repair completed without difficulty was similar for those whose rent is above (46 percent) or below (47 percent) the median.

Differences seem to exist across the race and ethnicity of renters in the responsiveness of landlords to fixing problems. Although black, white, and Hispanic renters are all similarly likely to have contacted their landlord about a problem, they are not equally likely to report that they had no problems getting their landlord to fix it (figure 21). Over half of white renters who contacted their landlord about a problem with their apartment said that they had no difficulty getting their landlord to fix the problem, whereas 28 percent had moderate or substantial difficulty in getting them to do so. Among black renters who contacted their landlord about a problem, however, 42 percent had moderate or substantial difficulty, and among Hispanic renters 44 percent had this level of difficulty. These differences may, in part, reflect differences in the type of landlord or property management companies from which respondents of different races or ethnicities rent--which the survey cannot observe. Nevertheless, the difference in the odds of having at least some difficulty between white and black renters are robust to controlling for the rent, geographic location, and housing type of the unit as well as the gender, age, marital status, income, and education of the renter.

Experiences and Expectations for Home Purchases

The survey also explores home purchase decisions and experiences--both among recent homebuyers and among renters who are considering purchasing a home. Thirty-seven percent of non-homeowners indicate that they probably or definitely expect to purchase a home within the next five years.

When asked to consider what will result in them shifting from renting to owning in the next several years, the most common responses are that they will have saved enough for a down payment or have increased certainty about the location where they want to live. Each of these reasons was cited by just under three-fourths of renters expecting to buy. Both expected increases in income, which is cited by 68 percent of these potential buyers, and increased certainty about their job (59 percent) are also important factors. Thirty-eight percent expect to buy because they will get married, have children, or experience other changes in their family circumstances.

For many renters, it is apparent that the down payment is a crucial barrier on their path toward homeownership. This can be seen both based on the high number of renters who report that they rent because they cannot afford a down payment and the high number of renters who expect to buy in the coming years who say they will do so in part because they will have saved enough for that payment.

Among recent first-time homebuyers who purchased their home since 2015, personal savings was the primary source of funds for their down payment. Seventy-three percent of these buyers used personal savings to fund at least part of the purchase (table 23). One out of five first-time homebuyers indicates that they received a loan or gift from family or friends to help fund the purchase. Eight percent of recent first-time homebuyers relied exclusively on a loan or gift from family or friends for the down payment.

Table 23. In addition to your mortgage, what sources of funds did you use, if any, when you purchased your current home? (by type of homebuyer)

Percent

 

References

 

 30. Respondents are specifically asked about affording to live on their own in their current neighborhood, rather than living alone more generally, in order to capture the respondents who could afford to live alone but would have to find a cheaper neighborhood in order to do so. Return to text

 31. Since the SHED asks respondents about whether they and/or their spouse or partner own their home, and not whether the house is owned by anyone living in the home, this number is not directly comparable to somewhat higher homeownership rates from the Census Bureau's American Community Survey. Return to text

 32. Throughout this section and the subsequent section, many questions asked of renters are also asked of individuals who neither own nor rent, because they are living in their home rent free. Discussions of results for renters include these individuals for questions where both groups are asked. Return to text