Mortgage News May 22, 2023
According to Bank of America’s 2023 Homebuyer Insights Report, a significant number of optimistic individuals looking to purchase homes, particularly those in their 40s and younger, are proceeding with their plans despite perceiving the current market as advantageous to sellers. Although 55% of surveyed potential homebuyers acknowledge the increased competitiveness of the market compared to the previous year, 54% intend to accelerate their home purchases or stick to their original timeline. This includes 62% of Gen Z homebuyers and 55% of millennial homebuyers.
Despite the optimism of many prospective homebuyers, not all are eager to enter the market. According to the survey, 39% of Americans consider it a seller’s market, while 18% believe it’s a buyer’s market, and 31% think it’s neither. The survey revealed that common obstacles frequently mentioned by respondents encompassed elevated prices and interest rates (51%), inadequate funds for down payments (37%), and unfavorable credit scores (37%). However, nearly 40% feel more confident about buying a home today compared to last year, while 26% feel less confident, and 28% remain neutral.
According to Matt Vernon, the head of retail lending at Bank of America, the perception of the market has shifted due to the moderation of rates, resulting in a less frenzied atmosphere. However, the limited inventory continues to contribute to a highly competitive environment. Vernon encourages homebuyers to analyze the market, assess their priorities, and carefully consider options within their budgets.
The report highlights the significance of financial stability as a driving factor for homeownership, with a historical correlation between homeownership and long-term wealth accumulation for families. Surprisingly, 56% of both Gen Z and millennial respondents express intentions to purchase a home within the next two years, closely aligning with Gen X at 58%. Additionally, 47% of prospective homebuyers state that they are motivated to buy in the current housing market due to dissatisfaction with renting and escalating rental costs, while 28% aim to begin building equity.
According to the survey, potential homebuyers are willing to allocate up to 25% of their monthly income for mortgage payments on a starter home and up to 30% for a long-term residence. In contrast, they would allocate 29% of their income towards monthly rent. Approximately 55% of these individuals plan to buy a home with a spouse or partner, while 38% intend to embark on the homebuying journey independently.
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