The Spring homebuying season started off strong, and home purchases show little sign of slowing, due to surging demand and low inventory.
According to the annual Bank of America’s 2022 Homebuyer Insights Report, homes are being snatched off the market as 65% of prospective homebuyers reported they would make an offer within three days of viewing a home, and 20% saying they would make an offer immediately.
Homes spent an average of 25 days on the market in February 2021 —31 days less than the 56 days recorded two years ago— despite the fact that some 56% of prospective homebuyers surveyed report being hesitant to purchase due to high home prices, which are expected to increase 10%2 by the end of 2022.
To help better their financial positions, many buyers are getting creative in the ways they’re saving. Whether obtaining an additional job or taking on freelance work, Bank of America found that 56% of homebuyers are willing to consider a second occupation to earn supplemental income to purchase a home.
Approximately 34% of prospective homebuyers said they would consider starting an online store to sell handcrafted products, whereas 31% said they would sell some of their belongings to help save for a home.
“Whether your next step is to build your savings or apply for a mortgage pre-approval – the more informed you are about the market and purchasing process, the more able you’ll be to put your best foot forward when pursuing a home,” says Matt Vernon, head of Retail Lending for Bank of America. “There’s no denying the challenges of today’s homebuying market. We’re helping many consumers make informed financial decisions on their path toward homeownership.”
Buying a home has been deemed one of the most important investments, and expensive purchases most people will make in their lifetimes, which requires knowledge and careful planning. Some 53% of prospective homebuyers intend to buy a home according to their original timeline, and 12% projected to buy sooner than they originally intended.
To make their dreams of homeownership a reality, data shows prospective homebuyers are willing to compromise to reach this goal, such as:
- Moving to an up-and-coming neighborhood (82%)
- Buying a home further from entertainment, restaurants, and shopping (79%)
- Buying a smaller home (71%)
- Forgoing outdoor space (70%)
However, there are limits to what prospective homebuyers are willing to sacrifice in order to purchase a home. A reported 46% of prospective homebuyers said they would sacrifice privacy—such as giving up the luxury of a yard or patio—whereas 35% said they would said they would rather spend money on clothing or accessories, and 34% preferred to travel rather than save more for a home. An estimated 26% reported saying they would rather save less for a home than give up their self-care routines and luxuries, like shopping trips or getting a going out to dinner.
Millennials are a driving force behind today’s competitive homebuying market, as they surpass baby boomers as the nation’s largest adult generation. Millennials now represents the largest group of adults buying homes, and 34% say they feel the pressures of adulthood—meaning they feel like they should be buying a home at their age. Approximately 53% are motivated by the desire to set down roots for their growing family, and 43% are motivated to buy so they can start building home equity.
The millennial generation is navigating homebuying on their own terms. Less than one-third—or 29%—would seek financial help from their family to buy their home. However, millennials would consider:
- Delaying their home purchase timeline to save more money (51%)
- Increasing their initial budget (46%)
- Sacrificing their preferred location in favor of finding the perfect home (43%)
- Building their own home (36%)
“We’re helping clients reach their financial goals every day, and we know building their personal wealth through homeownership is one of their biggest priorities,” shares AJ Barkley, head of Neighborhood and Community Lending for Bank of America. “That’s one of the reasons why the Bank of America's Community Homeownership Commitment was created, to help would-be buyers overcome the upfront costs of homeownership.”
To learn more details and read the full report, click here.