Eighty-four percent of Americans believe purchasing a home is a good financial decision, but once again, concerns about affordability in the midst of rising home prices lurk in the background of many would-be buyers’ minds.
According to the National Association of Realtors 2017 National Housing Pulse Survey, 60 percent of respondents said affordability and the rising cost of buying or renting a home in their area is a concern. Furthermore, 44 percent categorized the issue as a “very big” or “fairly big” problem.Who’s impacted the most?
When taking a closer look at the numbers, young, single, working class minorities seem to be bearing the brunt of what NAR calls “the housing pinch.”
Fifty percent of respondents who are single said the lack of affordability is a big problem; this was a 14 percentage point jump from the 36 percent of married couples who feel the same. Likewise, 53 percent of non-white respondents said lack of affordability is a big problem compared to 40 percent of their white counterparts.
From there, women, the non-college educated and those aged 18-49 all see affordability as a “big problem.”
This concern about affordability plays out in the financial strain that buyers are willing to endure in order to become homeowners.
Thirty-eight percent of respondents said their current monthly mortgage or rent payment is a strain on their budget, with 14 percent categorizing it as a “significant strain” and 24 percent categorizing it as a “slight strain.”
Millennials (48 percent) and those living on the East (36 percent) and West (33 percent) coasts were the most likely to say their monthly payments are a strain, which is no surprise since those areas are consistently experiencing rises in median rental and for-sale home prices.Buyers determined to become owners
Despite issues with affordability, buyers and aspiring buyers are determined to become owners even if it means adjusting their budget to fit a higher monthly mortgage payment.
Fifty-one percent of respondents said they’d put a strain on their budget to live in a better neighborhood that offers great job opportunities and higher quality schools. Of course, those making over $100,000 (62 percent) were more willing to do so, but a good chunk of those making $60,000 to $100,000 (50 percent) or $60,000 and under (47 percent) were willing to make the sacrifice as well.
Why? Well, most respondents see homeownership as a great long-term investment even if it causes financial strain right now.
Eighty percent of survey takers said buying a home allows them to build equity, and they said owning your home by the time of retirement is great for building long-term familial wealth and personal net worth. Around 70 percent said owning a home is a good investment opportunity.Unnecessary burdens
Just because buyers and aspiring buyers are willing to sacrifice current financial comfort to buy a home, doesn’t mean they have to. As it turns out, buyers are confused about down payment options. Forty percent said a down payment of 15 percent or more was needed to buy a home, but 70 percent said they think it should be lower than 10 percent.
In NAR’s 2017 Profile of Home Buyers and Sellers, buyers said they had a down payment of 6 percent, a stat that’s been consistent for the past three years.
“Current non-owners’ ultimate goal of owning a home may not be as far-fetched as they believe,” said NAR President William E. Brown in a statement at the time of the profile’s release.“There are mortgage options available for creditworthy borrowers with manageable levels of debt and smaller down payments.”
Brown says the silver lining of the survey comes from respondents’ strong belief in homeownership — something Realtors can capitalize on by properly educating and guiding buyers who are ready to begin their homeownership journey.
“Despite the growing concern over affordable housing, this survey makes it clear that a strong majority still believe in homeownership and aspire to own a home of their own,” he said in a press release. “Building equity, wanting a stable and safe environment, and having the freedom to choose their neighborhood remain the top reasons to own a home.”
Read the full report here.
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