We certainly gave away the big reveal in the headline above, but it’s hard not to, especially after evidence from the past two weeks in our 3-part series. There has been much discussion since the recent presidential election on how Americans may endear to different or similar beliefs depending on where they reside along the municipal line. We can say when it comes to homeownership and buying attitudes, the pattern of differences seems real.
Based on ValueInsured’s latest Modern Homebuyer Survey, Americans across the board highly value homeownership. Roughly 8 in 10 (83% of all urban, 79% suburban, and 78% rural respondents) believe buying a home is more beneficial than renting. This resounding endorsement of owning holds true across age groups, even among the youngest Millennials, with 78% in agreement. Consistent majority of our population also believe owning a home is an important part of their American Dream.
But the shared value seems to end there. To start, the homebuyer profiles are drastically different, which may explain why their home buying needs and attitudes diverge. Urban homebuyers in ValueInsured’s nationally represented sample are reported to be younger, more transient, more likely to be new immigrant, and – not surprisingly, due to higher housing costs in urban areas – plan to buy with a significantly higher budget:
- The average urban homebuyer (38.4 years old) in ValueInsured’s survey is a decade younger than the average suburban and rural homebuyers.
- Nearly 1 in 3 (31%) of urban homebuyers plan to buy a starter home, although their budget is much higher (median budget $405,500) than their suburban and rural counterparts’. Only 13% of rural homebuyers plan to buy a starter home, and their median budget is $158,400.
- 7 in 10 (71%) rural homebuyers and the same proportion of suburban homebuyers plan to stay in the next home they buy for 7 or more years. This is twice the portion of urban homebuyers (35%) who plan to stay as long. It is consistent with urban homebuyers’ plan to buy a starter home, and also coincides with their higher concerns for a job loss or a job change as a risk factor for home buying.
- 18% of urban homebuyers in the survey self-identify as a recent immigrant, while only 3% of suburban and rural homebuyers say the same.
- It may have something to do with the higher home prices, younger average age, or perhaps the family-reliant nature of some immigrant culture, 21% of urban homebuyers say they plan to seek financial help from family for their down payment. Only 12% of suburban and 8% of rural homebuyers plan to do the same.
Demographics aside, the real glaring differences are in how residents from different areas of density view home buying. Urban homebuyers seem content with not looking for a “forever home”, and instead see home buying as serial investments. Suburban and most potently rural homebuyers appear less bullish about home buying as a good investment; they are also much more likely to be concerned with the prospect of another housing crisis:
- 77% of urban homebuyers believe buying a home in their neighborhood is a good investment. 66% of suburban homebuyers and 58% of rural homebuyers believe the same.
- About 2 in 3, or 65% of all urban homebuyers are confident another 2008-style housing crisis will not happen again in their lifetime. But there is a stunning confidence decline outside of urban areas – only 34% of suburban and 29% of rural homebuyers say they have the same confidence. In other words, over 7 in 10 rural homebuyers do not rule out they could witness another housing crisis. Age again could be a key factor here: based on their average age, most of the current survey’s suburban and rural respondents were in their 30’s or older during the 2008 housing crisis, many could even be homeowners. Most of the survey’s urban respondents would have been in their 20’s or younger in 2008, so the effects of the housing crisis might have been less direct.
However, today’s urban homebuyers are far from out of touch with the prospect of an over-heated market. As home prices have risen quickly particularly in urban areas, a potential bubble is more top-of-mind for urban homebuyers surveyed:
- 68% of urban homebuyers say homes are overpriced in their area and not sustainable, and 60% expects a market bubble and price correction in the next two years. Among suburban homebuyers, less than half, or 47% believe homes in their area are overpriced, and about 1 in 3 (35%) expect a bubble and correction. The majority of rural homebuyers do not think home prices are too high – 37% believe their area’s homes are overpriced and only 26% expect a housing bubble and correction.
- Given their higher home price fluctuation, and stronger perceived investment benefits in home buying, it may not be a surprise that more urban homebuyers say they are concerned with “timing” the real estate market. Nearly 7 in 10 (69%) urban homebuyers say they try to time the market, and are worried they could be buying at the top. Slightly less than half (47%) of suburban homebuyers have the same concerns, and about 4 in 10 (41%) rural homebuyers are concerned with timing the market or worried about buying at the top.
It is hard to argue that Americans come in different shapes and sizes, as do homebuyers and their different ideals and believes. Just as rural, suburban and urban areas tend to have different crime rates, or sleep schedules, people who live in different sizes of hometown with diverse demographic, social and economic factors may also likely view home buying differently. Home prices have seen a great run in recent months in many urban areas, but it appears from ValueInsured’s research urbanites also feel their stakes are higher. As urban migration continues in American, with the U.S. Census placing as high as 80% of our population now living in urban cities, homeownership views too may take on more urban shapes. However, it is important to remember people move, often when they age. Today’s starter home urban buyers could be tomorrow’s forever home suburban buyer. As the largest generational cohorts of Millennials grow up, housing attitudes in the not-too-distant future may take on a decidedly more suburban color.