The survey conducted online by The Harris Poll for BW reveals that the American dream of buying a home remains strong despite challenges like a shortage of entry-level homes, slow income growth, and political uncertainty. More than 4 in 5 (84%) Americans consider buying a home a priority, a significant increase from 2018. Over 100 million Americans feel optimistic about their ability to buy a home, with 27 million planning to purchase in the next year alone. This pent-up demand is driven by young people starting families and others seeing homeownership as a milestone in adulthood. Seeking guidance to make informed decisions, buyers aim to find a good home they can afford and qualify for a mortgage to secure their dream home.
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Key findings:
An increasing number of Americans prioritize homebuying, with 84% overall considering it a priority, including different generational groups. Nearly 100 million Americans plan to purchase a home in the next five years, showcasing radical optimism. Challenges remain for some, with 42% of nonhomeowners citing low income as a barrier to buying a home. The economy and election year influence plans, as 49% of Americans are more likely to buy a home in the upcoming year due to current economic and political conditions.
Confidence in homebuying is high, with 99.3 million Americans planning to purchase in the next five years, including 27 million in the next 12 months. Factors contributing to this optimism include increased income and generational trends. A majority believe buying a home is a good investment, reflecting positive sentiments about the future. However, expert advice cautions that the success of a home investment depends on various factors such as timing and market conditions.
Despite the overall optimism, some may have unrealistic expectations, as 30.8 million Americans plan to become first-time homebuyers in the next five years.
With an estimated 2 million homes sold to first-time buyers in 2019, there is a possibility that some of these hopes may not be realized. Generation Z and millennials are the most ambitious in their plans to purchase a home in the next five years, with 57% of Generation Z and 53% of millennials planning a purchase. However, affordability remains a significant obstacle, as 75% of Americans believe it is more difficult to afford a first home today than it was 25 years ago.
The desire to buy could lead younger buyers to underestimate their financial readiness, with 29% of homeowners feeling financially insecure after purchasing their current home. Lack of affordability is a likely culprit in the declining homeownership rate among young people, as home prices have risen faster than incomes.
Obstacles to ownership include low income, lack of a down payment, and a lack of available homes within budget or desired location. Many Americans believe a down payment of 20% or more is necessary to purchase a home, but there are mortgage options available for lower down payments.
The economy and political climate may also impact homebuying plans, with 49% of Americans saying the current economy and political climate would make them more likely to purchase a home in the upcoming year. Despite these stressors, careful consideration of all costs associated with homeownership and realistic financial planning can help prospective buyers make informed decisions.
Shifting Perspectives on Homeownership Stressors
Entering the realm of homeownership is a significant milestone, often accompanied by a mix of excitement and anxiety. The journey is fraught with uncertainties that can contribute to stress. To delve deeper into this phenomenon, we engaged with both prospective homebuyers and recent buyers to gain insight into their experiences and expectations. Surprisingly, it appears that individuals planning to buy a home in the next five years anticipate facing stressors at a higher frequency than those who have made a purchase in the past five years, revealing a disconnect between expectations and reality.
Navigating Financial Challenges as a Homeowner
The process of buying a home marks just the beginning of a homeowner’s financial journey. When asked about their biggest financial concerns for the next two years, a prominent response among Americans at large is the task of paying off credit card debt (27%). Conversely, homeowners identify affording home repairs and maintenance as their primary financial stressor. A quarter of homeowners (25%) express that this aspect poses a significant financial challenge.
Lewis highlights, “Purchasing a home signifies a crucial step towards adulthood, yet maintaining a home presents a separate set of responsibilities.” He advises allocating approximately 2% of a home’s value annually towards maintenance to ensure financial preparedness for homeownership.
The surveys conducted among homebuyers were carried out online in the United States by The Harris Poll on behalf of BW in January 2020, January 2019, and December 2017. The data represents responses from over 2,000 U.S. adults aged 18 and older in each survey. It is important to note that these online surveys do not adhere to a probability sample, thus precluding the calculation of theoretical sampling error. For a detailed overview of the survey methodology, including weighting variables and subgroup sample sizes, please reach out to Marcelo Vilela at [email protected]
BW categorizes generations as follows: Generation Z (1997 and later), millennials (1981-1996), Generation X (1965-1980), and baby boomers (1946-1964).
The affordability chart for first-time homebuyers includes Zillow median listing prices for bottom-tier homes and the 2018 U.S. Census estimates of median household income for individuals aged 25 to 44, adjusted to 2019 levels using the Bureau of Labor Statistics’ Employment Cost Index.
Population calculations are based on the U.S. Census population estimates as of July 1, 2019.
Down payment comparisons are calculated based on a 4.125% interest rate on a 30-year fixed-rate mortgage.
The sentence is: “I am going to the store to buy some groceries.”
Rewritten sentence: “I will visit the store to purchase groceries.”