62% willing to wait for prices and/or rates to
fall before buying a home, down from 85% just six months
ago
CHARLOTTE, N.C., Dec. 4, 2023
/PRNewswire/ -- Prospective homebuyers' patience may be waning,
with fewer willing to wait until home prices or interest rates come
down to purchase a home, according to new data from the Bank of
America Homebuyer Insights Report (PDF). Today, 62% are
willing to wait for prices and/or rates to fall before buying a
home, down from 85% just six months ago. And they seem to be taking
action: Sales of new single-family houses in September 2023 were a seasonally adjusted 759,000
– up from 679,00 sales in April
2023.1
"When it comes down to it, if buying a home is your goal and
within your budget, the best time to buy is when you're ready
financially and you can find a home that fits your needs," says
Matt Vernon, head of consumer
lending at Bank of America. "Even in the current interest rate
environment, there are clear benefits to purchasing a home and
beginning to build equity."
This latest research also explores what buyers would be willing
to forgo in order to buy sooner, and what would motivate current
homeowners to sell.
Approximately 80% of outstanding U.S. mortgages have an interest
rate below 5%.2 This gives homeowners an incentive to
stay put because the average 30-year fixed mortgage rate hit 8% in
October of this year.3 Younger people, Millennials in
particular, are being hurt disproportionally by this trend,
according to Bank of America Institute's newly released Housing
Morsel. The rate disparity is compressing the already limited
supply of houses for sale, and begs the question: What does
inspire homeowners to sell and free up inventory for would-be
homebuyers in today's environment?
What Would Make Homeowners Sell?
Half of current
homeowners say they'd be prompted to sell if their dream home
became available (50%) and/or if they found a more affordable area
(54%) – even if it meant paying a higher interest rate for a new
mortgage. Additional motivations for some, but not as many, to move
and give up their current mortgage rate include:
- Job opportunity or job relocation – 40%
- Nicer neighborhood amenities – 40%
- The need for a larger home or more rooms – 38%
- A social community to be a part of – 32%
- A desire to be adventurous and move to a new area – 28%
- Moving to a home with rental potential – 21%
In fact, millions of people are moving to areas, including the
Sun Belt (PDF), where they can afford to buy a home. Those surveyed
say the following could or already has motivated them to move from
one state to another:
- Cost of living – 60%
- Career/job reasons – 44%
- Family and relationships – 37%
- Affordability of housing– 33%
- Safety concerns – 27%
- Retirement – 25%
- Adventure and exploration – 20%
Work-related reasons may also inspire homeowners to sell in this
market, and work is a major driver of out-of-state moves. Those who
have or would move to a new state for their careers are driven by
increased job opportunities (57%), job requirements to relocate
(29%) or the fact that they can work remotely and are no longer
tied to an office (28%).
Overall, regional labor market dynamics and migration trends are
closely correlated, according to Bank of America Institute.
Internal Bank of America data found that of the 26 Metropolitan
Statistical Areas (MSAs) tracked, Boston and Portland,
OR, are more likely to see inward migration due to job
changes and cities such as Austin,
San Antonio, Las Vegas and Tampa saw the biggest population inflow during
the third quarter. What is more, relocating workers seem to be
getting bigger pay increases than those who stayed in the same
MSA.
Willing to Sacrifice
With inventory scarce, the
Homebuyer Insights Report also explored how prospective buyers are
adapting. The report found those surveyed would give up specific
home features to increase their chances of finding a home in the
year ahead. Notably, there are some differences in what older and
younger generations are willing to sacrifice in order to buy a
home.
Gen Z (15%) are less likely to give up space than baby boomers
(40%). However, Gen Z (24%) would sooner compromise on location,
including proximity to work, schools, and amenities than baby
boomers (6%).
Across all generations, would-be buyers are most likely to give
up the following if it increased the chances of finding a home to
purchase:
- A brand-new home – 35%
- Being near family – 33%
- Public transportation access – 32%
- Historical charm – 31%
Homeownership Lays the Foundation for Financial
Success
This survey asked participants if they view
homeownership as a top indicator of success. Here's how
homeownership stacked up against other key markers of success in
life:
- Being healthy physically and mentally – 71%
- Personal growth and development – 65%
- Having strong relationships and connections with friends and
family – 63%
- Having a good work-life balance – 58%
- Homeownership – 48%
- Career fulfillment – 46%
- Building a family – 46%
- Reaching a certain amount of money in savings/investments –
43%
- Contributing/supporting causes that are important to a person –
35%
However, homeownership tops the list of how respondents define
financial success (53%), according to those surveyed. Also
important: saving enough money for an emergency fund (50%), paying
down debt (45%) and being able to retire early (43%).
Nearly two-thirds (63%) of these homeowners said owning a home
is one of their greatest personal achievements – more than raising
a family (50%), being in a committed relationship (32%) and/or
overcoming a significant challenge (25%).
Respondents continue to see homeownership as a reflection of
significant achievement and driver of wealth creation that can help
them build equity over time:
- 91% of respondents say they perceive their home more as a
valuable investment than as a financial liability.
- 89% of respondents say they think about the financial security,
rather than the financial risk, of owning a home.
- 90% of respondents say home is a place to make memories and
share experiences rather than just a place to live.
- 81% of respondents say they think of owning a home as
liberating rather than confining.
"There's a clear desire for homeownership, but for some, it has
become more challenging to achieve due to current market
realities," shares Vernon. "That's why we are committed to offering
affordable homeownership solutions, which include grants to help
homebuyers with their down payments and closing costs, with no
repayment required."
Community Homeownership Commitment™
Bank of America's $15 billion
Community Homeownership Commitment aims to help low- and
moderate-income homebuyers across the country begin to build their
personal wealth and family legacy through the power of
homeownership. The program includes a combination of specially
designed products, resources and expertise as well as one of the
most generous grant programs in the industry. Bank of America
offers up to $17,500 in combined down
payment and closing costs grants and has already granted nearly
$438 million in those grants as of
the third quarter 2023, with 88% of those grants going to
first-time homebuyers.
About Bank of America's Homebuyer Insights Report
Sparks Research conducted a national online survey on behalf of
Bank of America between September
25th and September
28th, 2023. A total of 1,000 surveys (500
homeowners / 500 renters) were completed by adults 18 years old or
older, who make or share in household financial decisions, and who
currently own a home/previously owned a home or plan to own a home
in the future. Survey completions were monitored by gender
and age and/or proper balancing. The margin of error for the
total national quota of 1,000 surveys is +/- 3.1% at the 95%
confidence level. The margin of error for homeowner and
renter quotas of 500 surveys is +/- 4.4% at the 95% confidence
level. Select questions allowed respondents to choose more
than one answer, resulting in responses that may equate to more
than 100 percent.
Bank of America
Bank of America is one of the world's
leading financial institutions, serving individual consumers, small
and middle-market businesses and large corporations with a full
range of banking, investing, asset management and other financial
and risk management products and services. The company provides
unmatched convenience in the United
States, serving approximately 69 million consumer and small
business clients with approximately 3,900 retail financial centers,
approximately 15,000 ATMs (automated teller machines) and
award-winning digital banking with approximately 57 million
verified digital users. Bank of America is a global leader in
wealth management, corporate and investment banking and trading
across a broad range of asset classes, serving corporations,
governments, institutions and individuals around the world. Bank of
America offers industry-leading support to approximately 4 million
small business households through a suite of innovative,
easy-to-use online products and services. The company serves
clients through operations across the
United States, its territories and more than 35 countries.
Bank of America Corporation stock is listed on the New York Stock
Exchange (NYSE: BAC).
For more Bank of America news, including dividend announcements
and other important information, visit the Bank of America newsroom
and register for news email alerts.
Reporters may contact:
Susan Atran, Bank of
America
Phone: 1.646.599.3300
susan.atran@bofa.com
1 U.S. Census Bureau: Monthly New Residential Sales,
September 2023
2 Zillow: Rate-Locked Homeowners Nearly Twice as Likely
to Not Consider Selling
3 Redfin: Today's Mortgage Rates
View original content to download
multimedia:https://www.prnewswire.com/news-releases/bofa-report-shows-fewer-prospective-homebuyers-willing-to-wait-for-a-better-market-environment-302004671.html
SOURCE Bank of America Corporation