BW 2018 Home Buyer Report

Buying a home is an expensive decision and one that can be quite stressful, with home prices that seem to have no ceiling and a purchasing process that can confound even the savviest buyer.

Still, 75% of Americans say buying a home is a priority, according to a new BW survey conducted online by Harris Poll.

For this report, BW analyzed data from that December 2017 survey of more than 2,000 U.S. adults, as well as the BW mortgage calculator, the Consumer Financial Protection Bureau and other sources to develop a snapshot of current home buyer sentiments, concerns and outlooks.

The costs of purchasing a home are a top concern for Americans who rent, and most of those who prefer renting cite financial reasons for their decision, according to the survey. Cost concerns are understandable, with the median price of existing single-family homes climbing 5.3% over the past year, according to the National Association of Realtors.

But these financial concerns aren’t putting a hard stop on sales — approximately 15% of Americans report having purchased a home in the past five years, and 32% intend to do so in the next half-decade. Both of these groups — recent and prospective buyers — are optimistic, citing the investment potential of their home as a top reason for purchasing, according to the survey. Further, data from BW’s mortgage calculator indicate users anticipate putting a healthy 20% down on their homes.

The survey results also indicate millennials (ages 18-34) aren’t counting themselves out of homeownership — they prioritize homebuying at rates higher than other generations, contrary to the misconception they’re uninterested in putting down roots.

But the news isn’t all positive: Results suggest some Americans aren’t fully informed about the value and costs of homeownership. Some believe buying is more affordable than renting, and while this could be true, especially over the long term, they may not be taking ongoing costs like maintenance, property taxes and homeowners insurance into full consideration. In addition, more than half of Americans indicate they’d rather have an appreciating home than more money in their retirement savings, a potentially dangerous tendency if they’re otherwise ill-prepared to retire comfortably.

“The entry costs to homeownership, such as the down payment and closing costs, can be substantial, but it doesn’t end there,” says BW mortgage expert Tim Manni. “Prospective home buyers cannot neglect the ongoing costs of ownership when determining how much home they can afford. While your home is likely to be your largest financial asset, and you want to do all you can to make that asset grow, you shouldn’t neglect your other fiscal responsibilities — things like saving for retirement and putting money aside in an emergency fund.”

• Nearly one-third (32%) of Americans plan on purchasing a home within the next five years, and 15% of Americans have purchased one within the past half-decade. Both groups cite “it will be a good investment” as their motivation for buying over all other reasons.

• The most common reason Americans prioritize buying a home, across all generations, is that they believe it’s a good investment — 64% of those who prioritize it cite this reason.

• BW mortgage calculator data indicate potential buyers are being ambitious with their savings goals — intending to put approximately 20% down, on average.

• Just 17% of Americans say they prefer renting over homeownership, and many of their reasons suggest their choice is out of financial necessity rather than preference. More than half (56%) who prefer renting over buying say they don’t have the money to buy, 24% say they don’t want the financial commitment, and 22% say they have bad credit.

• 82% of millennials (ages 18-34) say buying a home is a priority, according to the survey, compared with 75% of Generation X (35-54) and 69% of baby boomers (55 and older). Millennials also aspire to buy a greater number of homes, on average, throughout their lifetime and are most likely to say they’d like to buy a home to rent out for extra income.

Despite strong opinions voiced in 2017 in the media, and likely across dinner tables, about the current economy and political climate, Americans are evenly split on how these factors would influence a 2018 home purchase. When asked whether the current economic and political climate would make them more or less likely to buy a home this year, 35% said more likely, 35% said less likely and 30% said they were unsure.

Considering their overall ability to purchase a home, including finances and housing availability, half (50%) of Americans feel neither better nor worse about their ability to purchase a home this year compared with last year. Of the 28% who feel better, 45% say it’s because they have more in savings and 41% because they have more income. Of the 23% who feel worse, 57% cite having less income and 48% noted less in savings.

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to see why Americans feel better or worse about their homebuying abilities.

Approximately one-third (32%) of Americans plan to purchase a home in the next five years.