Millennials’ View of Home Buying Turns Negative

Millennials’ View of Home Buying Turns Negative

Millennials’ housing confidence and enthusiasm plummet to record low in latest ValueInsured Modern Homebuyer Survey

​​​​​​​DALLAS, August 15, 2018 – Millennials’ perceived value in buying a home dropped below 50 percent, down significantly from post-Brexit high, according to the latest ValueInsured quarterly Modern Homebuyer Survey

Americans tour 7.4 homes before buying

Americans tour 7.4 homes before buying

“The first one I saw and I knew it was the one…” may be a line you would hear in a movie, but it is unlikely how a homeowner would describe his or her home buying experience, and certainly not in 2018.

In this competitive housing market where homebuyers are accustomed to compromises and disappointments, most buyers need to tour over a half dozen homes – often after viewing many more online – before finding the right one, according to latest findings in ValueInsured’s Q2 2018 Modern Homebuyer Survey.

6 in 10 homeowners did not enjoy home buying experience

6 in 10 homeowners did not enjoy home buying experience

We know this is true: Americans have a strong desire to become homeowners (79% among non-homeowners, according to the latest ValueInsured Modern Homebuyer Survey) and the next generation continues to view homeownership as an important part of their American Dream (78% among millennials). However, increasing evidence shows they may not enjoy the process of actually buying a home.

Americans expect rising rates to stifle housing demand

Americans expect rising rates to stifle housing demand

After months of upward trends, home mortgage rates have retreated somewhat and are currently at an average of 4.39 percent for a 30-year fixed loan, lower than levels in June. However, after two benchmark rate hikes already this year, two more are signaled by the Federal Reserve and are expected by top analysts for 2018, meaning current mortgage rates most likely could increase again. 

In ValueInsured’s latest Modern Homebuyer Survey, over 3 in 4 Americans (76%) believe mortgage interest rates will continue to go up in 2018. Nearly 6 in 10 (59%) predict an average 30-year fixed rate will reach 5% by the beginning of 2019, and 13% Americans expect to see 6% 30-year mortgages by the end of 2019.

Homebuyers' remorse on the rise

Homebuyers' remorse on the rise

A realtor we know recently said this: “All homebuyers have buyer’s remorse at some point during the pre-closing escrow period. I never not hear from a buyer after contract signing and before the home closing, some wonder if they paid too much, others may ask if I read a recent article about the market potentially turning.” In a survey conducted last year, Trulia found nearly half of all Americans have buyer’s remorse about the home they bought.

Now, with stakes ever higher in this expensive market, where home payments in some areas are swallowing up 45% of local median income, expectation of buyer’s remorse is high.

Inflation and debt worries - Impact on housing

Inflation and debt worries - Impact on housing

You may have noticed many more reports about rising debt, delinquencies, inflation and risk of an associated recession.  Curious ourselves, we thought we'd put things into context (you have to be concerned with fake news, right)?  And it was interesting. 

If you just follow housing, you may have positive or negative feelings about the market trends, but to get the full picture, you cannot isolate just that one expenditure.  You have to look at similar debts like student loans, car loans and credit cards (and rising delinquencies).  Put together, we are now at similar debt levels as 10- years ago.  So, when a buyer is thinking about buying a home, they are also thinking about all of these other debts and expenses. 

And then there is inflation.  It has been whispered about for a while, but it may become a roar in the near future. This is a great article on why you should keep an eye on it (just ignore the sales pitch at the end).

Millennials wish to own a home, but are they saving enough?

Millennials wish to own a home, but are they saving enough?

Since its inception in Spring 2016, ValueInsured’s quarterly Modern Homebuyer Survey has reported shifts in homebuyer attitudes and confidence; however, one thing has remained constant: Millennials’ strong desire to own home, currently at 77%. At the same time, Millennial homeownership is now at the lowest level – at 35.3% – since the U.S. Census began tracking homeownership by age groups in 1982.

While Millennials enjoy strong employment in this robust economy, many are not saving enough of their paychecks for a home. Today, Millennial homeowner hopefuls are paying for $5 coffees (sometimes three of these daily) and $900 cell phones. According to a recent study, 53% of Millennials spent recently on an Uber or taxi ride, and 73% on a music, sporting or other live entertainment event. 79% spent to dine at a hot restaurant in town. So, it is not surprising that according to the latest Q2 ValueInsured Survey, 72% of all millennials who wish to buy a home save less than $250 a month. 

Sellers demand more than high prices, botching sales

Sellers demand more than high prices, botching sales

Home buying has become intensely competitive in some of the nation’s top markets. Over 1 in 3 homebuyers made an offer on a home last year sight unseen, while home sellers are expecting shorter closing windows and more lenient closing terms. None of these is news. Now, we have another new data point.

According to ValueInsured’s latest Q2 2018 Modern Homebuyer Survey, 21% of all surveyed homebuyers have experienced a failed sale transaction due to what they consider to be “unrealistic seller’s demands,” including waiving contingencies, cash-only offers, and fast closing. 26% of millennial first-time homebuyers and 30% existing starter-home buyers surveyed report to have experienced these sellers’ demands that they believe to have derailed a potential sale.