Top 5: What keeps American homebuyers up at night?

We can all agree that home buying is a rewarding and exciting journey, but it’s not without bumps along the way and anxious moments. While 78% of all non-homeowners in America say they want to buy a home (ValueInsured July 2017 Modern Homebuyer Survey), 72% of potential homebuyers say they expect to experience stress during the home-buying process.

ValueInsured asked homebuyers in its latest survey what concerns keep them up at night when they are planning to buy a home. The top 5 answers make sense, but there are some regional and demographic differences.

The top 5 concerns ranked by homebuyers are:

  1. Not able to find a home I like within my budget
  2. Not saving enough for a down payment
  3. Difficulty paying the monthly mortgage
  4. Can’t find a house I want to buy
  5. Home prices falling after I buy

Not surprisingly, Millennial and first-time homebuyers are most concerned about not saving enough for a down payment. First-time homebuyers are nearly three times as likely as upgrade homebuyers (27% vs. 10%) to list this as their number-one concern about buying a home. Women are also more likely than men to worry about not having enough for a down payment.

There is a high correlation (+.70) between concerns for a job loss and ability to pay the monthly mortgage. Homebuyers who are most worried about a potential job loss or job move tend to rank difficulty paying their monthly mortgage higher as a concern that keeps them up.

Interestingly, repeat homebuyers, more mature homebuyers and homebuyers with higher household income are more likely to be concerned about prices falling after they buy compared to less experienced and lower-income peers. This might seem counter intuitive at first; one possible explanation is that these repeat and higher income buyers have first-hand experience with the last housing correction and have become more cautious. This is also true among homebuyers who plan to put down a bigger down payment. Concern for falling home prices after buying increases as a homebuyer’s planned down payment percentage increases.

In hot housing regions like California and Washington states, homebuyers’ top worries are their inability to find a home within their budget, and low housing inventory. They are also more likely to be concerned about home prices falling after they buy than about their ability to pay for the monthly mortgage payment.

Based on the research results, affordability continues to be a top concern among most homebuyers. One interesting takeaway is that repeat and upgrade homebuyers are more likely to be concerned about seeing prices fall after they buy. For months now housing industry watchers have been searching for answers to explain homeowners’ reluctance to sell – despite it being a sellers’ market – that had severely limited housing inventory and drove up home prices. In the same ValueInsured survey, 83% homeowners say now is a good time to sell, but 69% say they are concerned about prices correcting after they buy their next home. It is likely that we have found our explanation for more mature and experienced homeowners’ reluctance to sell, which has created a bottleneck. They need a plan for their next move before they sell, and so far, many do not see an affordable or low-risk path ahead.