Home >> Daily Dose >> The Drivers Impacting Home Buying Decisions
Print This Post Print This Post

The Drivers Impacting Home Buying Decisions

Homebuyer enthusiasm is on the wane driven by rising home prices, according to the latest quarterly Modern Homebuyer Survey released by ValueInsured on Wednesday.

The survey revealed that housing confidence amongst American homebuyers, led by millennials, had seen a steady decline in the previous 12 months. In the third quarter of 2018, the survey said that the percentage of millennials who believed that buying a home today was a good investment dropped to 48 percent from 54 percent in the previous quarter. This was also a steep drop from the high of 77 percent recorded by the survey in 2016.

Millennials are also not very enthusiastic about buying a home over renting. The survey revealed that 61 percent of millennials believed it was beneficial to buy a home instead of renting one, down from 83 percent during the same period in 2016. "While 76 percent of all homeowners believe that now is a good time to sell a home, only 39 percent of millennials who want to become homeowners believe now is a good time to buy a home," the survey said.

The ValueInsured Housing Confidence Index for millennials also registered a low score of 56.9 on a hundred-point scale in Q3 2018, declining 1.7 points from Q2 and 10.1 points from the same period last year.

“Conventional wisdom assumed millennials were buying homes later because they chose to get married and have children later,” says Joe Melendez, CEO, and Founder of ValueInsured.  “New research now suggests homeownership may be the cause, not the effect, of a delayed family formation. It is an alarming trend, and we see more acute evidence in the expensive housing regions.”

Even among millennials who are interested and motivated to buy a home today, their decision comes with a lot of anxiety, the survey revealed. The top concern? They would not save enough to buy the home they wanted. The survey found that 67 percent of millennials were concerned that they would not be able to save enough for a home that they actually liked. Fifty-two percent said that a home they bought now was likely to drop in value within a year, while 49 percent of those willing to buy a home now were concerned that rising mortgage rates could make homes that were currently within their budget become unaffordable later.

To learn more about what millennial homebuyers want and how lenders can reach out to them,  join MReport's webinar Hottest Buyers on the Block: Reaching Millennials, presented by Ellie Mae. At this webinar, experts will discuss the latest millennial homebuyer trends, lender strategies to reach out to this market segment, and how digital channels can help. Click below to register for this webinar.

About Author: Radhika Ojha

Radhika Ojha, Online Editor at the Five Star Institute, is a graduate of the University of Pune, India, where she received her B.A. in Commerce with a concentration in Accounting and Marketing and an M.A. in Mass Communication. Upon completion of her master’s degree, Ojha worked at a national English daily publication in India (The Indian Express) where she was a staff writer in the cultural and arts features section. Ojha also worked as Principal Correspondent at HT Media Ltd and at Honeywell as an executive in corporate communications. She and her husband currently reside in Dallas, Texas. You can contact her at Radhika.Ojha@theMReport.com.
x

Check Also

Hope for First-Time Buyers

As rates climb back toward historic norms, homes are now becoming more sensitive to changing mortgage interest rates. Find out how this may work in first time buyers' favor.

GET THE NEWS YOU NEED, WHEN YOU NEED IT.

With daily content from MReport, you’ll never miss another important headline in originations, lending, or servicing. Subscribe to MDaily to begin receiving a complimentary daily email containing the top mortgage news and market information.