Job insecurity keeps 1 in 5 Americans from dream home

Ten years after the financial crisis, U.S. unemployment rate has dropped from an alarming 10% to the current level of 3.9%, a near-record low. However, the encouraging statistic may not necessarily translate to caution-free spending, at least not when it comes to buying a home. A latest survey of potential homebuyers suggests job insecurity is one of the most-cited reasons that keep Americans from pursuing the home of their dream.

In the Q3 2018 ValueInsured Modern Homebuyer Survey, interested homebuyers were asked to name personal obstacles – outside of market factors including home prices and mortgage rates – that are keeping them from pursuing their dream home. Among non-homeowners who wish to buy their first home soon, 22%, or over 1 in 5, said uncertainty about their job is keeping them from taking the ownership plunge. About 1 in 6 (16%) existing homeowners who wish to upgrade into their dream home said the same.

This may not necessarily be a bad trend. Higher FICO scores and declining mortgage delinquency rates reaffirm Americans’ growing conservative fiscal attitudes since the height of subprime lending. During the same period, American jobs have also become more mobile and transient. Despite low unemployment, Americans can no longer always count on being at the same job in the same city as much as our parents could a generation ago. This, along with post-traumatic stress from the last housing crisis, likely contributes to some homebuyers’ skittishness in home buying.

Uncertainty about job futures aside, interested homebuyers are also kept from their dream home by other barriers. Top on the list among first-time homebuyers is their personal credit; nearly 1 in 3 (31%) say their less-than-stellar personal credit could keep them from a mortgage they need to buy their dream home. Only 7% of existing homeowners who wish to upgrade are concerned about the same. Other top cited barriers include:

  • Credit card debt, which gets in the way of 15% of potential upgrade homebuyers and 15% of new homebuyers.

  • A personal challenge such as a divorce or an illness has been a barrier to 15% of upgrade homebuyers and 14% of first-time buyers.

  • 10% of all existing homeowners and 18% of interested first-time homebuyers cite student loan debt as a roadblock to pursuing their dream home.

Amid headlines of buyers’ demand or sellers’ markets, home sales in the U.S. continue to perform below potential. Even when setting aside expensive home prices and rising borrowing costs, highly motivated buyers still have other barriers to overcome before signing at the closing table. While many in the housing industry grew their business by offering easy loans a decade ago, those who give homebuyers an extra sense of precaution and protection may prove to win in this new era.