Where are Americans house buying priorities? While home shopping these days, we’d rather be closest to our favorite coffee spot than our families.
That’s just one weird fact in a group of housing market studies. Several others tell us, not only are rising mortgage rates making it expensive to buy a home, it still beats giving our money to a landlord.
Homebuying dreams and deal breakers
Forty percent of Americans say the distance to their favorite restaurants and coffee shops is an important factor in their house search, says a study from real estate company Purple Bricks. Oddly, only 34 percent say the same about their family and best friends. Other than that, we seem to be interested in the usual home amenities. Here’s a look at what Americans are looking for on their house hunt…
- Looking for a larger home: 37 percent
- Interested in downsizing: 27 percent
- Need a yard. Almost half say they’d cross the home off their list: 45 percent
More serious to your health, 69 percent say they would run if they found mold. And men and women disagree on how they feel about dealing with neighbors. Twenty-eight percent of men will move if they have nosy neighbors, compared to 22 percent of women. And more women (54 percent) say they would move if they felt the neighbors are crazy. Only 47 percent of men say the same.
Mortgage rates trend: As interest rises, we keep buying
Mortgage rates haven’t stopped the vast majority of homebuyers from shopping. Only 5 percent say that if mortgage interest rates rise to more than 5 percent they’ll scrap their plans to look for a home. Meanwhile, 24 percent say those rates would have no impact on their search, according to a recent poll from real estate brokerage Redfin.
“Homebuyers are well aware that higher mortgage rates mean higher monthly payments, but mortgage rates remain very low, historically, and buyers will make compromises,” says Redfin economist Taylor Marr. “Most of the pressure buyers are feeling is from competition for a very limited number of homes for sale. The fact that such a small share of buyers will scrap their plans to buy a home if rates surpass 5 percent reflects their determination to be a part of the housing market.”
Here’s how buyers will react if rates hit 5 percent…
- Slow down their search and wait to see if they came back down again: 32 percent
- Look in other areas or buy a smaller home: 21 percent
- Increase their urgency to buy before rates go up further: 19 percent
Rent costs higher than last year
Rent is up this year in 27 out of 35 largest real estate markets, reports Zillow. We already see how expensive it is to buy a home. What happens when you’re trying to save for your first home and your rent continues to go up?
Debt.com reported this March that starter home values were up at higher rates than more expensive homes. Meaning those cheaper homes were great investments for the sellers, but less affordable to buyers. And not to mention more competitive. As of March, the supply rate had depleted by 18 percent from last year. Those first-time buyers may have to bide some time due to these challenges.
“Saving enough money for a down payment is one of the greatest hurdles to homeownership, and rising rents is one of the main reasons why saving is so difficult,” the study says. “Even in markets where rent growth is slowing, high prices have already been established. With mortgage rates rising and mortgage affordability deteriorating, owning a home may start to feel out of reach for many Americans.”
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