[1]Higher home prices and low inventory aren't deterring the youngest generations from seeking homeownership, according to a new survey report from ServiceLink [2] that revealed generational trends among recent homebuyers, their sentiment about today's housing market, and the role technology plays throughout the process.
The 2023 ServiceLink State of Homebuying Report [3] (SOHBR) features insights from homeowners who either purchased a home, or tried to purchase a home, within the past three years. This comprehensive report examines year-over-year trends, generational preferences and other factors that shape the behavior of today's homeowners and prospective homebuyers.
"Even with the ups and downs in today's housing market, there is still a strong desire among several generations to obtain homeownership," said Dave Steinmetz, President of Origination Services, ServiceLink. "Our latest study suggests there are many homeowners and homebuyers who are ready to make their mark in the real estate market this year; whether it's to purchase a new home or take out a home equity loan. This indicates there is an opportunity for lenders to provide more education and resources to buyers and homeowners to guide them throughout their homeownership journey."
Key findings:
Seeking homeownership: More than half of respondents say they are open to purchasing a home
- Despite shifting market conditions, more than half (52%) of all respondents said they plan to consider buying a home
- Of those respondents, 61% of millennials say they plan to consider buying a home (as compared to 25% of Gen X, 12% of Gen Z and 2% of baby boomers)
Tapping into equity: Homeowners, especially millennials, plan to take advantage of the increasing value of their home
- Some 21% of surveyed homeowners reported having over $100,000 worth of equity in their home, followed by a combined 41% who said they have between $50,000 and $99,999 in tappable equity
- An estimated 44% of homeowner respondents plan to take out a home equity loan this year (as compared to 11% who said they don't know enough about home equity loans to consider them)
- Of those homeowners, 49% of millennials say they are likely to take out a home equity loan (as compared to 44% of Gen X, 41% of Gen Z and 12% of baby boomers)
- Roughly 73% plan to use the money to make home improvements, while 20% plan to use the money to pay off debt, including student loans
Lingering buyer fatigue: Complicated market conditions are leading some homebuyers to abandon the homebuying process
- Almost half (49%) of respondents considered buying a new home in the past 12 months, but ultimately decided against it (compared to 24% in the 2022 SOHBR)
- Of those who considered buying but decided against it, millennials led all generations at 58% (as compared to 24% of Gen X, 13% of Gen Z and 4% of baby boomers)
- Over half of these respondents (56%) said options were too expensive (as compared to 44% in the 2022 SOHBR)
- Additionally, 48% of this group said high mortgage rates were a main factor for hitting pause on the home search (as compared to 29% in the 2022 SOHBR, who said their financial situation changed and 28% who cited low housing inventory)
Auction is becoming more mainstream: Homebuyers are considering alternative paths to homeownership
- Some 40% of respondents would consider buying a home at auction, but haven't done so yet (as compared to 33% of respondents in the 2022 SOHBR)
- Of those who said they would consider buying a home at auction, but haven't done so yet, Gen X ranked the highest among all demographics at 46% (compared to that of millennials (39%), Gen Z (39%) and baby boomers (30%))
- The potential use for a home purchased at auction: primary residence (50%), rental income (23%) and fix and flip (20%)
Streamlining the process: More homebuyers want to leverage technology to improve the homebuying experience
- Convenience/ease of use (63%) and time savings (59%) prove to be the biggest benefits of using technology in the homebuying process, across age and gender. This is similar to the results of the 2022 SOHBR where 72% cited convenience/ease of use and 60% cited time savings
- Even though 41% of baby boomers said technology did not play a role in their mortgage process, 77% of baby boomers said convenience/ease of use was the top benefit of using tech (compared to 65% of millennials, 65% Gen X and 42% of Gen Z)
- A combined 68% of respondents said they are 'very willing' or 'willing' to submit videos or photos of their home for a virtual inspection (compared to a combined 13% who said they are 'not very willing' or 'not willing at all')
To read the full report, including more data, charts and methodology, click here. [4]