To Afford Homes, Buyers Work More and Give Up Entertainment and Vacations

Buying a home is expensive – often the single priciest transaction most of us ever undertake. So it should come as little surprise that a majority of home buyers report making some kind of financial sacrifice to afford their homes – with younger buyers, first-time buyers and/or parents more likely to give up something.
Although the housing market has cooled in recent months, homes in some areas remain out of reach for typical residents. In six of the country’s 100 largest metro areas, a mortgage on the median-valued home costs more than 30% of the median income – beyond what’s considered affordable. And even in more-affordable areas, saving for a down payment takes time and discipline.
  • 55% of buyers make some type of financial sacrifice in order to purchase their home.
  • The most common sacrifices include reducing spending on entertainment (25% of buyers reported sacrificing this), picking up additional work (18%) and postponing or cancelling vacation plans (16%).
  • Buyers also reduced or eliminated saving for retirement (13%) and postponed or cancelled health care services (8%).

Younger buyers, first-timers and parents are more likely to sacrifice

Younger buyers are much more likely to say they made financial sacrifices in order to purchase their home: 71% of Gen Z and millennial buyers did, compared with 57% of Gen X, and 33% of Baby Boomer and Silent Generation buyers.
Younger buyers also are more likely to make serious sacrifices: 13% of Gen Z and millennial buyers forwent or skipped health services compared with 8% of Gen X and 3% of Boomer and Silent Generation buyers. Similarly, 11% of Gen Z and millennial buyers lowered or cancelled some type of insurance coverage, a greater share than the 7% of Gen X and 3% of Baby Boomer and Silent Generation buyers.
Making sacrifices could be a function of going over budget, as younger buyers are more likely to do: 29% of millennials purchased a home above their initial budget compared with 23% of Gen X and 22% of Baby Boomers.
When asked why they went over budget, buyers in general (not just younger buyers) most commonly cited falling in love with a home above their price point (33% who blew the budget stated this reason), purchasing a home in better condition than planned (28%) and buying in a pricier neighborhood than planned (27%).
For younger buyers who were able to get into their homes, many had help from family: 47% of Gen Z and millennial buyers who purchased with a mortgage had help in the form of gifts or loans from family or friends for some portion of their down payment. This is substantially higher than the 33% of Gen X and 13% of Boomers and Silent Generation buyers with a mortgage who had such assistance.
Like younger buyers, first-time buyers also were more likely to make financial sacrifices to buy a home: 65% of first-timers mention at least one sacrifices compared with 47% of repeat buyers.
Parents are the third group of buyers who are likely to make sacrifices in order to buy homes: 67% of buyers with children at home made some type of financial sacrifice to afford their home compared with 44% of buyers without kids at home.

Silver lining: Few regrets among homeowners

After the sacrifices that many buyers make to afford their homes, there is a silver lining. Only 8% of homeowners regret purchasing instead of renting, and only 25% say they would buy a different home if they could do it all over again. The oldest homeowners are most likely to say they’d buy the same home again (86% of Silent Generation homeowners). Still, a large percentage (74%) of millennial and Gen Z homeowners say they got it right on the first attempt.

Comments

Post a Comment

Popular posts from this blog

34 Trends That Will Define Home Design In 2020

Image
Kitchens 1. Three-tone kitchens.  Two-tone kitchen cabinets — meaning the upper cabinets are one color and the lower cabinets another color, or the perimeter cabinets are one color and the island is a different color — dominated kitchens in the past couple of years. So it’s only natural that designers are building on the trend rather than doing away with it. In a three-tone kitchen, one more color or material is introduced to create an asymmetry in the palette that helps define zones or functions and keeps the eye moving. Here, designer Janina Cabrera of  J Style at Home  designed a gorgeous kitchen with white perimeter cabinets, a light wood island base and a knockout powder-blue hutch. In this kitchen by  Hutker Architects , a deep navy defines the refrigerator and pantry wall to the left, joining white perimeter cabinets and a superlight wood island base. Wood via the beams, ceiling, shelves and flooring adds to the diverse three-tone palette. ...
Read more

10 Things You Should Buy Now To Get Through COVID-19 Cabin Fever This Winter

  1. Outdoor gear Dave Labbe , senior vice president at Kittery Trading Post, saw record sales this summer of items like kayaks, camping gear, and bicycles. He expects the trend to continue for the winter. "Our anticipation is that all winter categories will see the same trend," he says. "Snowshoeing, cross-country skiing, downhill skies, snowboarding, and winter camping and hiking will boom as people continue to participate in anything outdoor-related." And outdoor activities aren't just for weekends, either. Kids who are still learning from home will need outdoor breaks. Store inventories of  backyard ice rink kits ,  backyard snowboards , skates, sleds, and snowman kits may melt away quickly. 2. Outdoor clothing Coats, hats, and mittens are popular every winter season, but this year you might have trouble finding what you want as more people brave the cold and snow to fend off cabin fever. "People want to continue spending time together safely this winte...
Read more

Black Homeownership Plunges To Record Low

The homeownership rate of black Americans hit an all-time low in the first quarter of this year as black communities continue struggling to recover financially from the housing crisis a decade ago, recent U.S. Census Bureau data shows. The black homeownership rate has dropped 8.6 percentage points since peaking in 2004. “We can see that discrimination is still there, although it has changed its form,” Michela Zonta, a senior policy analyst at the Center for American Progress, told  The Wall Street Journal . Zonta released a study this week that found higher-income black homeowners are more likely to purchase homes in predominantly minority neighborhood, which have mostly failed to see home values rise since the foreclosure crisis. In comparison, neighborhoods with predominantly white borrowers have seen homes appreciate 3% between 2006 to 2017, while homes in predominantly black neighborhoods tended to be worth 6% less than they were in 2006, according to Zonta’s study. ...
Read more