know-your-competition
It’s a seller’s market out there in most parts of the country, and in spite of rising mortgage rates, it doesn’t look like that’s going to change any time soon. In fact, according to a recent survey by Bankrate, one in four U.S. adults is considering buying a home this year. That’s about 59 million people! What does this mean for aspiring buyers? Let’s size up the competition.
Who wants to buy a home in 2017
Bankrate polled about 1,000 people and extrapolated from the results to estimate Americans’ feelings about homeownership. Of all Americans thinking about buying their first home or trading up to a new one, only 16 million are very likely to do so, Bankrate estimates. In addition, 20 million are somewhat likely to buy.
Minorities, particularly African-Americans, are particularly likely to buy this year, according to the survey. More than two in five black respondents said they were considering purchasing a home—more than double the percentage of potential white buyers.
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“Black homeowners were harmed in greater numbers by the housing crash” and the foreclosure epidemic, says Holden Lewis, a mortgage analyst for Bankrate.com. “Now that the economy has improved and time has passed, maybe they’re ready to jump back in and own a home again.”
Older millennials and Generation Xers, spanning ages 27 through 52, are also eager to become homeowners or trade up to a new abode, according to the survey.
“They have been stymied by stagnant wages, student loans, and a lack of available starter homes,” Lewis says, adding that now many of the younger buyers are establishing themselves in their careers and starting families. “If enough affordable homes are put on the market, we might see a surge of first-time home buyers in their early to mid-30s.”
Why most people probably won’t buy homes this year
But most of the folks who say they want to become homeowners probably won’t achieve their goal this year, says Lewis. That could be because of rising mortgage interest rates and home prices, difficulty coming up with the down payment, or just an inability to find the home of their dreams.
“Buying a home takes a lot of time and hassle,” Lewis says.
Only about 6 million new and existing homes were sold last year, according to the National Association of Realtors® and U.S. Census figures. And there aren’t that many more move-in ready homes out there, as builders can’t seem to put them up fast enough.
So if your finances and credit are in good condition, don’t go into panic mode over all the competition.
The financial trade-off of homeownership
But achieving the goal of buying a home doesn’t ensure financial stability. The survey found that more than 80% of current homeowners struggle to pay down their mortgage and sock away cash for a rainy day. And more than half of parents surveyed said those monthly loans have a major impact on their ability to save.
“Having kids and raising a family is a primary reason why Americans take the leap into homeownership—many consider it a key component of the American dream,” says Lewis. But then “they’re caught between the costs of raising children and paying those mortgages and saving money.”
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