[1]Americans are purchasing multi-family properties and co-owning homes with friends and/or family, and prospective homebuyers are willing to adjust their homebuying strategies to become homeowners in 2024.
This is according to a new consumer survey from RE/MAX [2], which revealed just how Americans are planning to achieve homeownership in the next 12 months.
The housing market has experienced a few years of record-high demand and historically low interest rates, according to new data, as market conditions continue to evolve, forcing many buyers to consider other options. The survey found that nearly 80% of prospective homebuyers are considering adjusting their homebuying plans.
"Affordability remains a key concern for homebuyers as home prices, interest rates, and inventory continue to fluctuate," said Nick Bailey, President and CEO of RE/MAX, LLC. "Despite today's economic environment, it's clear that homeownership is still a priority for many, and the results of our survey prove that buyers are willing to go outside their comfort zone to reach their goal."
Current Market Conditions Continue to Impact Buyers
Fluctuating market conditions and the uncertain rate environment continue to impact homebuyers' plans. Many are considering creative ways to break into the housing market.
- Some 43% of respondents have considered both other property types (fixer-upper, foreclosure, or tiny home) and financing options (borrowing from friends and family, purchasing with a down payment of less than 20%, or paying with all cash).
- An estimated 56% of respondents said they would consider purchasing a fixer-upper in need of remodeling, either for cosmetic or structural reasons.
- Roughly 34% of respondents would consider purchasing with a down payment of less than 20%.
- More than nine in 10 respondents were somewhat or very likely to discuss their alternative options with a real estate agent.
Affordability Remains the Main Priority
Affordability remains top-of-mind, and homebuyers are willing to explore other property types and financing options to achieve it.
- Some 73% of those who indicated they would consider purchasing a fixer-upper wanted the chance to purchase a home at a lower listing price.
- More than a quarter of consumers indicated they would consider purchasing a multi-family home, defined as a property occupied by the owner and additional non-owner tenants. Half of them would do so to split the cost of monthly mortgage payments.
- An estimated 13% of prospective homebuyers reported they'd be willing to consider a super commute, buying a home 2+ hours from where they work, for more affordability.
- Of the 34% of prospective homebuyers considering borrowing with a down payment of less than 20%:
- More than 75% would do so because it's what they can comfortably afford.
- Half would expect to make a down payment of 10% or less.
- Roughly 57% of respondents who indicated they would purchase a condo, attached home, or townhouse would do so to achieve lower maintenance costs.
Respondents also want to make a home uniquely theirs. Of those who reported they would consider purchasing a fixer-upper, nearly 70% would do so to allow them to start with a clean slate. Per the survey, an estimated 28% of respondents are willing to pay $30,000–$50,000 for repairs and renovations, with only 10% saying they'd spend upwards of $90,000.
The majority said they're willing to spend less than $70,000, with 23% saying $50,000–$70,000 is their limit and 25% indicating their sweet spot is $10,000–$30,000.
Homebuyers Are Turning to Friends, Family for Help
Homebuyers aren't shying away from asking for help on the path to homeownership. Some 27.7% of respondents would consider purchasing a home with a friend or family member. An estimated 17% of prospective homebuyers are willing to ask for help from friends and family when purchasing a home, for example, funds for down payments, co-signing loans, etc.
Offering a Down Payment of Less Than 20%
Among the alternative financing options presented, respondents were most likely (34%) to consider purchasing with a down payment of less than 20%.
Respondents provided the following reasons for doing so:
• Some 76% said it’s what they can comfortably afford to pay for a down payment
• Roughly 38% plan to purchase with a loan type that does not require 20% down, and 32% said their loan type does not require more than 3%
Half of respondents who indicated they would purchase with a down payment of less than 20% expect to put down 10% or less. An additional 40% plan to make a down payment between 10%-20%.
To read the full report, including more data, charts, and methodology, click here [2].