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Nearly 75 Percent of First-time Homebuyers are Optimistic about the Current Housing Market

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Despite optimism, approximately 60 percent of those surveyed express concerns about affordability related to interest rates, overpaying and additional expenses.

Cherry Hill, NJ – March 13, 2024 (BUSINESS WIRE) Amid lingering concerns around affordability and interest rates, most first-time homebuyers still feel optimistic about the housing market in 2024 and are ready to spend, according to an annual study from TD Bank, America’s Most Convenient Bank®.

With home prices temporarily edging downward following their all-time high in 2023, according to the January Case-Shiller Index, TD’s Annual First-Time Homebuyer Pulse found that of those looking to buy a home in the next year, nearly three in four (74%) respondents felt optimistic about the housing market. And nearly all (97%) have already started taking initial steps in the homebuying process.

TD Bank surveyed 1,009 Americans planning to buy their first home in 2024 to gather insights around their feelings on the current housing market, as well as their thoughts on overall preparedness regarding home inventory and the costs associated with purchasing a home.

Economic Conditions Still Pose Concerns but Buyers Remain Positive

Perhaps with a renewed hope for lower rates coming mid-2024, 40% of respondents agreed that right now is a good time to buy a home. Additionally, more than three quarters (78%) of first-time homebuyers felt their personal financial situations are in stable condition in 2024.

“Based on the industry consensus, homebuyers can potentially look forward to rates easing a bit, but the financial steps needed to purchase a home should remain top of mind, with one of the most important being to speak with a mortgage professional early in the process,” said Steve Kaminski, Head of U.S. Residential Lending at TD Bank. “Rates are central to affordability for many, but with a moderate decline in rates forecasted, buyers will still have to contend with low home supply and relatively high home prices. An experienced lender can help consumers navigate the interest rate and housing environment by providing mortgage options that can support their budget and best fit their financial situation.”

Though some lowering of interest rates in 2024 seems imminent, nearly two-thirds (63%) of first-time homebuyers cited rates as a concern about their ability to afford a home in today’s market. This is down just 1% from last year, revealing that despite optimism, interest rates remain a top concern for those looking to purchase a home.

This optimism has sprung into action with nearly all respondents (97%) having already taken steps in the homebuying process. About half (47%) have started saving for a down payment and nearly two in five respondents (38%) have established a budget for their home purchase.

The survey also revealed first-time homebuyers are willing to spend more on their first homes, with 40% citing they plan to spend $300,000 or more, up 9% from last year.

There’s Still More to Learn for First-Time Buyers

Despite 79% of low-to-moderate income (LMI) respondents expressing confidence or neutrality in their financial literacy regarding mortgages and homebuying, a surprising 46% remain unaware of down payment assistance programs that require lower initial investments.

In addition, over four in five LMI respondents cited the affordability of a down payment (82%) and affordability of a mortgage/other monthly expenses (81%) as one of the top three barriers they face as they begin the homebuying process.

“Down payments have remained an obstacle to the wealth vehicle of homeownership, but there are tools to alleviate some of the burdensome upfront costs,” said Kaminski. “Educating first-time homebuyers about the resources down payment assistance programs can provide, as well as the associated monthly costs of homeownership, can help them accomplish their dream of owning a home and strengthen their financial position over the long-term.”

Forever Homes are Top of Mind, Location Preferences Vary

This year’s data also saw an increase in respondents’ desire for forever homes, with 48% of respondents expressing their intention to purchase one, a 7% uptick from 2023. Conversely, interest in fixer-uppers or starter homes has decreased, with only 52% of respondents considering such properties, down 7% from last year. Among those seeking fixer-upper or starter homes, 40% hope to find a more affordable home.

When it comes to priorities in their home purchase, proximity to schools and workplaces emerged as top concerns for first-time buyers. Over one quarter (26%) cited access to quality schools and childcare as one of their top two considerations, while 22% emphasized being close to their workplace. Additionally, amenities such as backyards or pools (20%), access to dining and shopping (20%) and proximity to family (19%) were among the top priorities.

There’s also a notable desire for suburban living among first-time homebuyers. More than two in five (43%) first-time homebuyers prefer suburban areas over city living (28%), small towns (17%), and rural areas (12%).

Urban living is also growing in popularity, with the number of first-time homebuyers who prefer large cities or metro areas increasing by 6% over the last year. Notably, Gen-Z homebuyers are particularly driving the interest in urban living, with 31% expressing a desire for big city/metro area residences, compared to 29% of millennials and only 22% of Gen-X and Baby Boomers.

Other Top Considerations

  • Overpaying Fears Remain: In light of housing prices over the past several years and the competitive marketplace, nearly two-thirds (62%) of respondents have concerns about overspending on their first home.
  • Split on Lender Engagement: Mirroring the 2023 results, respondents are most likely to believe the best time to engage with a lender is as soon as they decide to buy a home, before looking (42%). One in three (33%) feel the best time is after they begin looking at houses, 25% believe lender services aren’t necessary until they find the home they want to buy.
  • Rising Popularity of ARMs and Down Payment Assistance: While 84% of first-time buyers plan to borrow for their home purchase, with 64% opting for mortgages, there’s a sharp rise in interest in adjustable-rate mortgages (ARMs), with 23% considering them—up from 12% in 2023. Additionally, over two in five buyers (42%) anticipate utilizing down payment assistance programs, up from 35% in 2023. These trends reflect a growing willingness among buyers to explore diverse financing options to achieve homeownership.

Survey Methodology

This online CARAVAN® survey was conducted by Big Village among a sample of 1,009 U.S. adults ages 18 and older who plan to buy their first home this year (in 2024). The survey was live on January 10-18, 2024. In addition, 247 interviews were conducted among low to moderate income respondents, defined on a per-state basis as having household income within 50% to 80% of the median family income for that state.

A similar survey was conducted from February 13 – March 1, 2023, among a sample of 1,007 first-time homebuyers.

About Big Village

Big Village Insights is a global research and analytics business uncovering not just the ‘what’ but the ‘why’ behind customer behavior, supporting clients’ insights needs with agile tools, CX research, branding, product innovation, data & analytics, and more. Big Village Insights is part of Bright Mountain Media. Find out more at https://big-village.com/.

About TD Bank, America’s Most Convenient Bank®

TD Bank, America’s Most Convenient Bank, is one of the 10 largest banks in the U.S. by assets, providing over 10 million customers with a full range of retail, small business and commercial banking products and services at more than 1,100 convenient locations throughout the Northeast, Mid-Atlantic, Metro D.C., the Carolinas and Florida. In addition, TD Auto Finance, a division of TD Bank, N.A., offers vehicle financing and dealer commercial services. TD Bank and its subsidiaries also offer customized private banking and wealth management services through TD Wealth®. TD Bank is headquartered in Cherry Hill, N.J. To learn more, visit www.td.com/us. Find TD Bank on Facebook at www.facebook.com/TDBank and on Instagram at www.instagram.com/TDBank_US/.

TD Bank is a subsidiary of The Toronto-Dominion Bank, a top 10 North American bank. The Toronto-Dominion Bank trades on the New York and Toronto stock exchanges under the ticker symbol “TD”. To learn more, visit www.td.com/us.

Contacts

Media:
Monet Irving
Corporate Communications Manager
Monet.Irving@td.com

A Majority of Homeowners Nationwide Felt Stress from their Most Recent Homebuying Experience, TD Bank Survey Finds

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Against the squeeze of rising home prices and low inventory, many homebuyers need solutions to ease the anxiety associated with purchasing a new home.

Cherry Hill, NJ – July 12, 2023 (PRNewswire) While more than half (54%) of homebuyers say now is a good time to purchase a home, it’s still very much a nerve-wracking process. According to TD’s 2023 Mortgage Service Index, 64% of respondents indicated their most recent homebuying experience was stressful.

TD Bank surveyed more than 1,800 homeowners across the country to examine perceptions around the homebuying and mortgage experience, as well as the housing market.

Alleviate homebuying stress by speaking to a trusted lender to ensure you’re tapping into resources that can save moneyTweet this

As expected, inventory and interest rates were the biggest factors for many

Home inventory challenges (24%) and mortgage rates (24%) tied as the leading factors that negatively impacted home purchasing decisions. Additionally, a majority (68%) of homebuyers cited shifting interest rates over the last year as a factor in their decision to buy. As inventories in many markets remain inconsistent, almost a third (29%) purchased newly constructed homes.

“The Federal Reserve has increased rates every time it has met for over a year, so the pause on rate hikes last month and the fact that we’ve likely reached a near peak may offer some respite for buyers,” said Steve Kaminski, Head of U.S. Residential Lending for TD Bank. “But given the competitive market and already high home prices, it’s understandable that the headache persists for many looking to purchase a home.  If inflation continues to tumble and the economic outlook improves, we hope to see the longer end respond favorably and assist in more affordable options. The key to alleviating that stress is speaking to a knowledgeable, trusted lender before beginning a search to ensure buyers are looking within their budget and tapping into all the resources that can save them money.”

Despite these inventory and rate challenges, three-fourths (75%) of those surveyed said that the mortgage process did not prevent them from closing on their home within their desired time frame.

With age comes wisdom: experience matters when navigating homebuying

When it comes to navigating the overall homebuying process, sentiment varies between generations:

  • Gen Z respondents (81%) and Millennial respondents (71%) were most likely to find the process stressful.
  • Baby Boomers, on the other hand, found the process of purchasing a home to be a less taxing experience, with 47% of these respondents indicating they didn’t find homebuying to be stressful.
  • While an overwhelming majority of Millennials (84%) and Gen Z (90%) respondents reported interest rates were a factor in their decision to buy, the majority of Baby Boomers (58%) said fluctuating interest rates were not a factor in their decision.

“Right now, it’s important for buyers that are entering the market to focus on what they can control, such as the fundamentals of preparation,” said Kaminski. “This includes meeting with a mortgage professional early in the process, knowing your financial position, and gathering documents early, which can help ease some of the concern around price and rates. Connecting with a knowledgeable lender to understand requirements and the process can also help buyers learn about affordable product options that can assist with payments, another potential de-stressor in the process.”

While the mortgage process remains intimidating for some, many homebuyers are also comfortable seeking guidance and tapping into automation, to perhaps simplify the experience:

  • A majority of homebuyers (95%) shared they have sought information or opinions on products and services offered by different lenders, with over half of respondents (54%) indicating they talked to a realtor in seeking additional information.
  • As automation in the mortgage lending process also continues to become more prevalent, 68% of homebuyers say they are very or somewhat familiar with automation being used by some banks to streamline the lending process.
    • Eighty-five percent of those with any familiarity would like to see at least some automation in the process.

Flexible Lending Remains a Strong Option for Buyers

As the traditional down payment of 20% or more becomes less of a priority for homebuyers, many are continuing to educate themselves on low down payment and affordability-based options, with 65% of respondents indicating they were familiar with programs designed to help homebuyers seek flexible options.

Interestingly, 40% of respondents spent $2,000 – $5,000 in unexpected charges during the homebuying process and another 10% say they paid over $5,000. This reinforces the importance of leaning on experts like realtors and loan officers who can provide valuable insight on the total cost of homeownership and affordability programs that allow for down payments as low as 3%, saving buyers money on out-of-pocket expenses. 

Among low down payment programs, TD Bank’s newest mortgage option, TD Home Access Mortgage, recently expanded its lender credit to $10,000 for purchase transactions which may be applied to closing costs and the down payment, two areas that can be roadblocks to homeownership. The lender credit can also be used to buy down a borrower’s interest rate, which can also help with affordability.

“Purchasing a home is one of the paths to building generational wealth for many, and trusted lenders are focused on making the process more accessible,” said Kaminski. “As factors like uncertain economic conditions, low home supply and fluctuating interest rates continue to make potential homebuyers feel sidelined, it’s important for them to know that lenders and many home professionals are continuing to evaluate processes and products to ensure homeownership is more equitable and inclusive.”

Survey Methodology

This report presents the findings of a CARAVAN® survey conducted by Big Village Insights among a sample of 1,813 U.S. homeowners who last purchased a home within the past 10 years and acquired a mortgage when they bought their most recent home. The survey was live from May 16 – 26, 2023.

About Big Village

Big Village Insights is a global research and analytics business uncovering not just the ‘what’ but the ‘why’ behind customer behavior, supporting clients’ insights needs with agile tools, CX research, branding, product innovation, data & analytics, and more. Big Village Insights is part of Bright Mountain Media. Find out more at https://big-village.com/.

About TD Bank, America’s Most Convenient Bank® 

TD Bank, America’s Most Convenient Bank, is one of the 10 largest banks in the U.S., providing over 9.9 million customers with a full range of retail, small business and commercial banking products and services at more than 1,100 convenient locations throughout the Northeast, Mid-Atlantic, Metro D.C., the Carolinas and Florida. In addition, TD Auto Finance, a division of TD Bank, N.A., offers vehicle financing and dealer commercial services. TD Bank and its subsidiaries also offer customized private banking and wealth management services through TD Wealth®. TD Bank is headquartered in Cherry Hill, N.J. To learn more, visit www.td.com/us. Find TD Bank on Facebook at www.facebook.com/TDBank and on Twitter at www.twitter.com/TDBank_US and www.twitter.com/TDNews_US.

TD Bank, America’s Most Convenient Bank, is a member of TD Bank Group and a subsidiary of The Toronto-Dominion Bank of Toronto, Canada, a top 10 financial services company in North America. The Toronto-Dominion Bank trades on the New York and Toronto stock exchanges under the ticker symbol “TD”. To learn more, visit www.td.com/us. 

SOURCE TD Bank

First-time Homebuyers See Now as a Good Time to Buy Despite Market Uncertainty

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TD’s First-Time Homebuyer Pulse reveals that more than one-third of buyers planning to purchase a home in 2023 view now as a good time to buy, despite economic conditions; rising rent costs may contribute to this growing interest

Cherry Hill, NJ – April 11, 2023 (PRNewswire) Amid cooling inflation and rising housing costs, many first-time homebuyers feel more certain about their financial situations, according to a recent study from TD Bank, America’s Most Convenient Bank®.  TD’s First-Time Homebuyer Pulse found that 54% of respondents indicate they are now better off financially than they were two years ago. And while buyers’ perception of the economy and affordability continue to draw concern, rising rent may be driving homeownership interest.

TD Bank surveyed 1,007 Americans planning to buy their first home in 2023 to learn more about their path to purchasing a home, as well as their thoughts on preparedness for the process as housing costs fluctuate nationwide.

First-Time Homebuyers Maintain Optimistic Outlook, Amid Market Concerns

Among those looking to purchase a home for the first time in 2023, 39% believe now is a good time to buy. Many who have begun their process are also showing signs of preparedness with 48% starting to save for a down payment. Additionally, more than eight in ten (85%) respondents indicated buying a home was a good long-term investment.

Though first-time buyers are looking more optimistically toward the homebuying season, reservations remain, with a majority (69%) concerned about the economy and 64% concerned about their ability to afford a home with rising interest rates.  That worry persists for six in ten respondents when considering the ability to afford a home combined with other expenses.

“Although typically overlooked when beginning the search for a home, meeting with a lender can help first-time buyers better understand the additional costs and opportunities associated with homeownership,” said Steve Kaminski, Head of U.S. Residential Lending at TD Bank. “Against the backdrop of higher rates, continued inflation, and low housing inventory, it is especially important for consumers to speak with mortgage professionals and realtors early in the process to create a well-adjusted budget and identify a comfortable price range for their homebuying search, better positioning them to compete and make an offer on the home that meets their unique goals.”

Rate hikes have also fueled some good financial habits, including the 43% of participants who cited that they have started monitoring their credit report or taken steps to improve their credit score to potentially reduce interest rates for their home loans. Additionally, 48% have established a homeownership budget for their first-time home purchase this year.

Rising Rent Costs Push Homebuying Interest

As you may expect, nearly two in five (38%) renters have considered delaying their home purchase and continuing to rent in 2023. Among them, 30% said the top reason for potentially delaying their homebuying plans is an inability to afford the home they want due to rising interest rates.

Interestingly, many have had the opposite reaction, seeing rising rent costs as a stimulus to forge ahead with purchasing a home. Of those survey participants who have not considered delaying their home purchase, 40% cited rising rent prices as the top reason prompting them to move forward with buying a home.

“Even as rates have risen in comparison to the historically low-interest rate environment many experienced in the past two years, buyers see the importance of building equity in a home purchase,” said Kaminski. “Homeownership has and continues to be a sustainable way to build intergenerational wealth, while providing the added benefit of shoring up a buyers’ financial position over the long-term.” 

Buyers Make Lemonade Out of the Big Lemon – Rising Rates

While inflation and rising rates are two factors first-time homebuyers can’t control, some are rethinking their approach to provide some flexibility in the home buying process. In fact, 59% of those looking to purchase a home this year indicate they want to pursue a fixer-upper or starter home.   

More than one-third (34%) of those who plan to buy a fixer-upper or starter home are seeking a more affordable home. More than half (52%) of those planning to buy a fixer-upper or starter home cited that current market conditions impacted their decision. 

Homebuyers aren’t just getting creative with the type of home they’re looking to purchase. They’re also coming up with long-term solutions to combat the current rate environment. More than one-fourth (27%) plan to refinance when interest rates come down.

“Depending on a buyer’s personal financial situation, how long they expect to be in the home and other risk-based considerations, there may be alternate mortgage options to consider in the near- and long-term when it comes to financing a home,” said Kaminski. “But it’s always important to talk through those options to weigh the benefits and risks with a mortgage professional early in the process.”

That sound advice continues to only motivate a small portion of first-time homebuyers, with just 22% starting the process of speaking with a mortgage lender.

Breaking through Misconceptions

While inflation, home supply and shifting rates may present challenging barriers to homeownership, there are a few misconceptions homeowners should look to avoid as they begin the process:

  • Learn about home ownership: The majority of participants (82%) agree that homeownership is important to them. It’s equally important to complete your due diligence around homeownership. Understanding what you need to know better positions you to work with realtors and lenders during the process.
  • Reconsider your down payment requirements: First-time homebuyers have a wealth of options when it comes to flexible lending needs, including down payments. Almost half of survey participants (44%) cited that saving money for the down payment was a barrier to purchasing a first home. Additionally, 81% of low-to-moderate-income (LMI) respondents ranked affordability of the down payment as one of the top three barriers they are concerned with facing during the homebuying process. Many lenders offer flexible down payment assistance programs, which allow borrowers to provide as little as 3% down when purchasing their first home. Among survey participants, more than one-third (35%) anticipate utilizing a down payment assistance program to buy their first home.
  • Talk to a lender early: True in any market, speaking with a lender can give a first-time homebuyer a snapshot of their budget, potential closing costs and which first-time homebuyer assistance programs they could be eligible for. This is especially true for low to moderate income (LMI) buyers. Among LMI respondents, more than eight in ten (82%) of respondents felt confident or neutral in their financial literacy in reference to mortgages and homebuying. Despite this confidence, almost half (46%) were unfamiliar with down payment assistance programs that allow homebuyers to put down a smaller amount of money.

Survey Methodology

This report presents the findings of a CARAVAN® survey conducted by Big Village among a sample of 1,007 U.S. adults ages 18 and older who have never owned a house and plan to buy their first home in 2023. The survey was live on February 13 – March 1, 2023.

Low- to moderate-income homebuyers are defined as respondents having household income within 50% to 80% of the median family income for their state.

About Big Village

Big Village is a global advertising, technology, and data company. Driven by our diverse group of experts, we provide a new way of working by bringing programmatic solutions, media, insights, and creative all under one roof. Big Village is headquartered in New York and has 12 offices across North America, Europe, and Australia.

About TD Bank, America’s Most Convenient Bank® 

TD Bank, America’s Most Convenient Bank, is one of the 10 largest banks in the U.S., providing more than 9.7 million customers with a full range of retail, small business and commercial banking products and services at more than 1,100 convenient locations throughout the Northeast, Mid-Atlantic, Metro D.C., the Carolinas and Florida. In addition, TD Bank and its subsidiaries offer customized private banking and wealth management services through TD Wealth®, and vehicle financing and dealer commercial services through TD Auto Finance. TD Bank is headquartered in Cherry Hill, N.J. To learn more, visit www.td.com/us. Find TD Bank on Facebook at www.facebook.com/TDBank and on Twitter at www.twitter.com/TDBank_US and www.twitter.com/TDNews_US. 

TD Bank, America’s Most Convenient Bank, is a member of TD Bank Group and a subsidiary of The Toronto-Dominion Bank of Toronto, Canada, a top 10 financial services company in North America. The Toronto-Dominion Bank trades on the New York and Toronto stock exchanges under the ticker symbol “TD”. To learn more, visit www.td.com/us. 

SOURCE TD Bank