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Homebuying Remains a Mystery for Many Americans

According to a new study from Real Estate Witch, Americans remain exceedingly misinformed about home prices—as 73% don't think homes are affordable right now, yet 60% actually underestimate the median home sale price.

Just 1 in 7 Americans—an estimated 14%—know the current median home price falls between $400,000 and $499,000. Some 23% believe the median home costs between $200,000 and $299,999, while another 23% think it costs between $300,000 and $399,999.

Despite underestimating current home prices, 76% of non-homeowners are concerned about rising home prices.

New research showed that just 12% of Americans know the current interest rate for a 30-year mortgage sits around 7%. Roughly 43% believe the rate is higher, with 1 in 4—or 26%—believing it exceeds 10%.

Although a third of non-homeowners (31%) say they're knowledgeable about the home-buying process and 43% say they're knowledgeable about mortgages, 62% wrongly think it's required to put down 20% on a home. In fact, 21% believe buyers need to put down more than 20%.

Homebuyers are required to pay private mortgage insurance (PMI) if they don't put 20% down. However, 85% of Americans don't know what PMI is—including 83% of current homeowners.

Data found about one-third of Americans (32%) say a credit score of at least 700 is necessary to purchase a home. In reality, homebuyers can qualify for a conventional loan with a score of 620.

 

The seller typically pays agent commission for the homebuyer, but 62% of Americans think the buyer pays their agent's commission. This misunderstanding could be why 65% of Americans wrongly think homebuyers can save money by not working with a real estate agent.

The survey also found that respondents underestimated the age of the average homebuyer: The average age of a first-time buyer is 36, but 73% believed it was younger.

With misinformation being dispersed left and right, it's not surprising that 83% of homeowners were surprised by parts of the home-buying process — 65% had to adjust their budget, and 63% had to adjust their priorities.

To read the full report, including more data, charts, and methodology, click here.

About Author: Demetria Lester

Demetria C. Lester is a reporter for DS News and MReport magazines with more than eight years of writing experience. She has served as content coordinator and copy editor for the Los Angeles Daily News and the Orange County Register, in addition to 11 other Southern California publications. A former editor-in-chief at Northlake College and staff writer at her alma mater, the University of Texas at Arlington, she has covered events such as the Byron Nelson and Pac-12 Conferences, progressing into her freelance work with the Dallas Wings and D Magazine. Currently located in Dallas, Texas, Lester is an avid jazz lover and likes to read. She can be reached at [email protected].
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