A new survey by RE/MAX found that 80% of consumers planning to purchase a home in the next 12 months are adjusting their homebuying plans due to the current economic environment.
The survey factored in responses from 1,000 U.S.-based individuals.
Due to current market conditions, some 43% of prospective homebuyers have considered new and unique ways to achieve homeownership, including other property types and financing options. In order to successfully break into the housing market and become a homeowner, respondents would consider:
Purchasing a fixer-upper—a property in need of remodeling either for cosmetic or structural reasons (56%)
Purchasing a tiny home or prefabricated home (39%)
Borrowing with a down payment of less than 20% (34%)
Purchasing a multi-family home: a property occupied by the owner and additional non-owner tenants (28%)
Purchasing a condo, attached home, or townhome (28%)
Purchasing a home with family or friends (28%)
Purchasing a home with all-cash, as in, without a loan (21%)
Borrowing money from family or friends (17%)
“Super commuting": buying a home two or more hours from where you work to afford it (13%).
Dive into the details of each alternative avenue to homeownership:
Fixer-Uppers
Of the 56% of respondents who said they would consider purchasing a fixer upper:
• Seventy-three percent wanted the chance to purchase a home with a lower cost.
• Seventy percent would purchase it as it allows them to start with a clean slate.
• Fifty-six percent are willing to purchase to offer them more flexibility with location.
• Twenty-eight percent of them are willing to pay $30K–$50K for repairs and renovations, with only 10% saying they’d spend upwards of $90K. The majority said under $70K, with 23% saying $50K-$70K, and 25% would spend $10K-$30K.
• Ninety percent of respondents willing to purchase a fixer-upper would also consider purchasing a foreclosed home.
Tiny Home/Prefabricated Homes
Thirty-nine percent of prospective homebuyers surveyed are willing to purchase a tiny home or prefabricated home. They reported the following benefits for purchasing a tiny home:
• Eighty-two percent would purchase it as a more affordable option.
• Fifty-eight percent wanted less property to maintain
• Twenty-three percent indicated that they prefer tiny homes over other housing options.
Additionally, 84% of respondents would opt for a prefabricated home to purchase at a more affordable price point, and 31% noted a lack of other housing options in their area.
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:
• Seventy-six percent said it’s what they can comfortably afford to pay for a down payment.
• Thirty-eight percent 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% and 20%.
Multi-Family Home
Among the 29% of consumers who indicated they would purchase a multi-family home:
• Sixty-one percent want to own an investment property.
• Fifty percent are willing to do so to split mortgage payments.
• Forty-seven percent want to live on the same property as family and friends without having to share living space.
Condo, Attached Home, or Townhome
Twenty-eight percent of respondents indicated they would purchase a condo, attached home, or townhome. A majority (68%) of them would do so to achieve more affordability. Additional reasons provided include:
• Fifty-seven percent want lower maintenance costs.
• Thirty-three percent said these property types are located in better areas than other options, and 30% noted a lack of other housing options in their area.
• Thirty percent prefer this property type over others.
• Twenty-one percent reported that they would purchase for the benefit of having a homeowners’ association.
Purchasing with Family or Friends
More than a quarter (28%) of prospective buyers would purchase a home with a family member or friend:
• Seventy-eight percent want to share the cost of purchasing a home.
• Sixty-nine percent would consider this option to be able to afford more than they would be able to on their own.
• Respondents were most likely to consider purchasing with their partner or significant other (non-married) (38%), parent (19%), or sibling (17%).
Purchasing With All Cash
While only 21% of respondents would consider purchasing a home with all cash, of those who reported they would:
• Sixty-two percent want to avoid high mortgage interest rates.
• Fifty-seven percent also noted they don’t want to go through the process of obtaining a loan and paying it off over time.
• Fifty percent shared they can comfortably afford to purchase with all cash
• Twenty-two percent believe it will help them stand out among the competition in the housing market.
"Super Commuting"
Thirteen percent of respondents indicated they would be willing to super-commute for the right purchase. Of those who would, 75% identified location, affordability, and flexibility to choose where they live (without changing their career) as the main benefits.=As buyers weigh their potential paths to homeownership, they’ll want to leverage the expert guidance of a real estate professional. Connect with a local RE/MAX agent to help you navigate the homebuying process.
To read the full report, click here. [1]