The September 2017 RE/MAX National Housing Report infographic shows housing market trends throughout 54 metro areas. The report is based on MLS information, includes all residential properties and is not annualized.
Jacob Feichter started selling houses the year Amelia Earhart disappeared. But for this centenarian broker-owner from Fort Wayne, Indiana, real estate never gets old.
Although 77 Percent Agree Buying a Home Is a Good Financial Decision, Data Shows Why Many Do Not Follow Through
SAN FRANCISCO, Sept. 19, 2017 (PRNewswire) Unison Home Ownership Investors, the leading provider of home ownership investments, today announced findings from its survey of 2,018 Americans, conducted by Atomik Research, on the biggest barriers to home ownership. The findings reveal that there are significant generational and regional differentiators when it comes to housing, including how much is being spent on rent, flexibility in budget and compromises for the ideal home location. While majority of Americans agree that buying a home is a good financial decision, saving enough money for a down payment and the process of getting approved for a loan are the major financial barriers.
The New York Fed’s recent Household Debt and Credit Report shows total consumer debt in Q2 2017 has increased by $114 billion to $12.84 trillion and student loan debt alone reached $1.3 trillion. Between skyrocketing rents, student loans and debt to pay off, many Americans have a hard time budgeting for a down payment. To understand changes in home purchasing behavior and industry perceptions, Unison’s survey dove deep into the decision-making process to understand barriers of entry, impact on monthly financials and accessibility to additional funds.
The Decision-Making Process to Buy or Not to Buy a Home
Although the majority of Americans understand that owning a home is a sound investment and are willing to make sacrifices for the ideal place, they are not ready to follow through with a purchase. Part of this is a result of not fully understanding the financial benefits or trusting the credibility of information available.
Financial Barriers Holding Prospective Buyers Back
Once the value of home ownership is understood, there are other financial factors stopping prospective buyers from moving forward. From rising property prices to not being able to save enough money for a down payment, people would rather avoid the hassle. Also, there’s a disconnect between what the respondents felt was required of a down payment for a mortgage, versus what is considered reasonable.
Generational and Regional Gaps to Home Ownership
The survey found that Millennials, compared to Baby Boomers and Gen Xers, are also far less likely to take the plunge. In addition, in major metro cities where housing is expensive, people are more likely to spend outside of their budgets to purchase a home.
“At Unison, we want to make home ownership a reality for more people. To do so, it’s important to study the current landscape and get a granular understanding into why the home ownership rate for the first-time buyer demographic has dropped over the last decade,” said Brian Elbogen, director of research, Unison. “While this survey confirms that saving enough money for a down payment is the biggest financial barrier, we also found that there is a missed opportunity for those who do not understand the benefits of home ownership, and that there are alternative financing options available.”
The Unison survey was conducted by Atomik Research on a sample of 2,018 general population respondents in the United States and in accordance with MRA guidelines and regulations. The online survey was fielded between August 7 and 11, 2017. Of the survey participants, 100 respondents were in each of the following cities: Baltimore; Boston; Chicago; Hartford/New Haven, Connecticut; Los Angeles; New York; Norfolk-Portsmouth-Newport News, Virginia; Philadelphia, Phoenix; Portland, Oregon; San Francisco; and Seattle. Atomik Research is an independent creative market research agency that employs MRA certified researchers and abides to MRA code.
For more information on Unison, please visit www.unison.com.
About Unison Home Ownership Investors
Unison is the leading provider of home ownership investments, modernizing home financing through long-term partnerships. Unison works with lenders, regulators and institutional investors to integrate home ownership investing into the U.S. housing finance system. Unison HomeBuyer helps purchasers buy the home they want with less debt and risk, typically by doubling the down payment. The larger down payment makes it easier to qualify for a loan, increases buying power, lowers the monthly payment and/or allows a buyer to reserve cash. Unison HomeOwner provides current homeowners with cash to eliminate debt, remodel, pay for school, invest or as a cash cushion, without the added debt or payments of a home equity loan or HELOC.
Unison’s platforms have received prestigious recognitions including the FinovateSpring 2017 and Benzinga 2017 Best of Show awards. Headquartered in San Francisco, Unison operates in 13 states and has secured over $300M in total capital. For additional information, visit www.unison.com.
Director of Corporate Communications
Account Director, MWWPR
Washington, D.C. – September 18, 2017 (nar.realtor) Despite being in the prime years to buy their first home, an overwhelming majority of millennials with student debt currently do not own a home and believe this debt is to blame for what they typically expect to be a seven-year delay from buying.
This is according to a new joint study on millennial student loan debt released today by the National Association of Realtors® and nonprofit American Student Assistance®. The survey additionally revealed that student debt is holding back millennials from financial decisions and personal milestones, such as adequately saving for retirement, changing careers, continuing their education, marrying and having children.
NAR and ASA’s new study found that only 20 percent of millennial respondents currently own a home, and that they are typically carrying a student debt load ($41,200) that surpasses their annual income ($38,800). Most respondents borrowed money to finance their education at a four-year college (79 percent), and slightly over half (51 percent) are repaying a balance of over $40,000.
Among the 80 percent of millennials in the survey who said they do not own a home, 83 percent believe their student loan debt has affected their ability to buy. The median amount of time these millennials expect to be delayed from buying a home is seven years, and overall, 84 percent expect to postpone buying by at least three years.
“The tens of thousands of dollars many millennials needed to borrow to earn a college degree have come at a financial and emotional cost that’s influencing millennials’ housing choices and other major life decisions,” said Lawrence Yun, NAR chief economist. “Sales to first-time buyers have been underwhelming for several years now1, and this survey indicates student debt is a big part of the blame. Even a large majority of older millennials and those with higher incomes say they’re being forced to delay homeownership because they can’t save for a down payment and don’t feel financially secure enough to buy.”
According to Yun, the housing market’s lifecycle is being disrupted by the $1.4 trillion of student debt U.S. households are currently carrying2. In addition to softer demand at the entry-level portion of the market, a quarter of current millennial homeowners said their student debt is preventing them from selling their home to buy a new one, either because it’s too expensive to move and upgrade, or because their loans have impacted their credit for a future mortgage.
“Millennial homeowners who can’t afford to trade up because of their student debt end up staying put, which slows the turnover in the housing market and exacerbates the low supply levels and affordability pressures for those trying to buy their first home,” added Yun.
Repaying student debt is influencing career choices, life milestones and retirement savings
In addition to postponing a home purchase, the survey found that student debt is forcing millennials to put aside several additional life choices and financial decisions that contribute to the economy and their overall happiness. Eighty-six percent have made sacrifices in their professional career, including taking a second job, remaining in a position in which they were unhappy, or taking one outside their field. Furthermore, more than half say they are delayed in continuing their education and starting a family, and 41 percent would like to marry but are stalling because of their debt.
Even more concerning, according to Yun, is that it appears many millennials are putting saving for retirement on the backburner because of their student debt. Sixty-one percent of respondents at times have not been able to make a contribution to their retirement, and nearly a third (32 percent) said they were at times able to contribute but with a reduced amount.
“Being unable to adequately save for retirement on top of not experiencing the wealth building benefits of owning a home is an unfortunate situation that could have long-term consequences to the financial well-being of these millennials,” said Yun. “A scenario where only those with minimal or no student debt can afford to buy a home and save for retirement is not an ideal situation and is one that weakens the economy and contributes to widening inequality.”
A better understanding of college costs is needed
The financial pressures many millennials with student debt are now experiencing appear to somewhat come from not having a complete understanding of the expenses needed to pay for college. Only one-in-five borrowers indicated in the survey that they understood all of the costs, including tuition, fees and housing.
“Student debt is a reality for the majority of students attending colleges and universities across our country. We cannot allow educational debt to hold back whole generations from the financial milestones that underpin the American Dream, like home ownership,” said Jean Eddy, president and CEO at ASA. “The results of this study reinforce the need for solutions that both reduce education debt levels for future students, and enable current borrowers to make that debt manageable, so they don’t have to put the rest of their financial goals on hold.”
“Realtors® are actively working with consumers and policy leaders to address the growing burden student debt is having on homeownership,” President William E. Brown, a Realtor® from Alamo, California. “We support efforts that promote education and simplify the student borrowing process, as well as underwriting measures that make it easier for homebuyers carrying student loan debt to qualify for a mortgage.”
In April 2017, ASA distributed a 41 question survey co-written with NAR to 92,419 student loan borrowers (ages 22 to 35) who are current in repayment. A total of 2,203 student loan borrowers completed the survey. All information is characteristic of April 2017, with the exception of income data, which is reflective of 2016.
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.2 million members involved in all aspects of the residential and commercial real estate industries.
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1. According to NAR’s annual Profile of Home Buyers and Sellers, the percent share of first-time buyers in the past three years is 33 percent, which is below the long-term historical average of near 40 percent.
2. According to 2017 research on student debt from Experian. (link is external)
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