Lack of Knowledge Keeps Buyers at Bay

Home price growth, uncertainty about down payments, and tight supply are making renters less sure of whether it’s a good time to buy a home, according to the Q3 Housing Opportunities and Market Experience (HOME) survey by the National Association of Realtors.

NAR found that 78 percent of homeowners and 60 percent of renters believe now is a good time to buy. The numbers may seem solid, but the trend has been inching downward for months. In  June, 80 percent of homeowners  felt now was a good time to buy, and that was a drop from 82 percent in March.

Likewise, 62 percent of renters believed it was a good time to buy in Q1; 68 percent of renters felt this way at the end of 2015.

Lawrence Yun, NAR ‘s chief economist, said that it’s possible that some of the hesitation about buying right now among young adults “is from them not realizing there  are mortgage financing options available that do not require a 20 percent down payment, which would be north of $100,000 in some expensive areas in the country. In fact, most first-time buyers put down much less.”

The average median down payment has been 5 percent for first-time buyers, according to NAR.

According to the report, awareness of low-down-payment mortgage options was scarce across all ages, income brackets and education levels. Fewer than 20 percent in each group indicated that they need 10 percent or less to finance their home purchase. Those ages 65 and older (43 percent) and under the age of 35 (37 percent) were the most likely to believe that they need more than 20 percent.

“Creditworthy prospective buyers should know that many lenders now offer safe, sustainable loans with as little as 3 percent down, and obtaining a mortgage isn’t as difficult as it was in the immediate years after the downturn,” said NAR President Tom Salomone.

Click here to view the entire survey from NAR.