1 in 5 Americans believe they’ll never own a home
Michael Dinich WEALTHSeventeen percent of adults feel the housing market will never return to stable, affordable levels.
Home affordability is so out of reach right now that two out of five Americans think they’d need to win the lottery to become homeowners. That’s according to a recent survey of 2,000 current non-homeowners, only 53 percent of whom are confident in any way that they’ll be able to own their own home someday.
Home ownership chances
In addition to the 40 percent who think hitting a jackpot is their best chance at home ownership, one in four believe they’d need to inherit money from someone in order to ever own a home. One in five even said they’d have to marry someone rich.
Overall, the average American thinks it would take them between three and four years to afford a home, and a third believe it would take them five years or more. Another 20 percent expect that they’ll never be able to afford one.
Hopeful for homeownership
Conducted by OnePoll on behalf of Divvy Homes, the survey also revealed that almost six in 10 non-homeowners would find it difficult to afford a house in their current neighborhood of residence.
Despite that, 67 percent are still hopeful about the possibility of one day owning a home, more than five times as many as the number of people who actively described themselves as hopeless. Another 19 percent describe
Mortgage rates bounce upward after pullback
LOS ANGELES — The average long-term U.S. mortgage rate rose this week, snapping a three-week pullback after reaching a high for the year in early June.
Mortgage buyer Freddie Mac said Thursday that the average rate on the benchmark 30-year home loan rose to 6.71 percent from 6.67 percent last week. A year ago, the rate averaged 5.70 percent.
The increase brings the average rate back to where it was three weeks ago.
High rates can add hundreds of dollars a month in costs for borrowers, limiting how much they can afford in a market that remains unaffordable to many Americans after years of soaring home prices and limited housing inventory.
The median monthly payment listed on applications for home purchase loans in May rose to $2,165, up 14.1 percent from a year ago and a 2.5 percent increase from April, the Mortgage Bankers Association said Thursday.
The average rate on a 30-year home loan is still more than double what it was two years ago, when the ultra-low rates spurred a wave of home sales and refinancing. The far higher rates now are contributing to the low level of available homes by discouraging homeowners who locked in those lower borrowing costs two years ago from selling.
The dearth of properties on the market is also a key reason home sales have been slow this year. Last month, sales of previously occupied U.S. homes were down 20.4 percent from as year earlier, marking 10 consecutive months of annual declines of 20 percent or more, according to the National Association of Realtors.
Of note, the average rate on 15year fixed-rate mortgages, popular with those refinancing their homes, also rose this week, increasing to 6.06 percent from 6.03 percent last week.
A year ago, it averaged 4.83 percent, Freddie Mac said.
themselves as frustrated and 11 percent feel desperate.
The changes in market dynamics and rise in interest rates are weighing heavily on would-be buyers.
While over half (52 percent) believe the current housing market is unstable, 46 percent believe things will level out within the next two to five years. And 17 percent feel the market will never return to stable, affordable levels.
Down payment dilemma
Respondents think they’d need to make an average of $76,000 a year to afford a starter home, and that they’d need at least $45,000 to afford a down payment on a starter home.
Nearly half of respondents (44 percent) are willing to get a second job or side gig in order to get
closer to their goal of homeownership.
The ideal down payment size would be, on average, 8 percent of the overall purchase price, which would make their ideal home worth just under $570,000. Those that dream of being able to buy a home in the next few years prioritize affordable monthly payments, the home being the right size for now and the future, and the location being ideal for their family’s needs.
Mortgage financing
However, 56 percent think they’d be denied if they tried to apply for a mortgage right now.
“Potential buyers are looking for alternatives to traditional mortgage financing or are stuck waiting for a reprieve from the rising rates and prices that keeps so
many of them renting and locked out of homeownership,” said Adena Hefets, Co-founder and CEO of Divvy Homes.
“There are so many factors putting downward pressure on a potential homeowner’s buying power — high interest rates, a lack of supply, increasing cost of living — that the starter home seems to be on the verge of extinction,”
Out of those respondents who currently rent, 47 percent worry about home prices getting more and more expensive before they can afford to buy.
“Throwing money away on rent” was also considered one of the biggest drawbacks to not owning a home among 46 percent of respondents, in addition to feeling uneasy about the stability of their long-term living situation and
watching interest rates rise before they can afford to buy.
Affordability
Affordability is an overall problem: 63 percent of respondents said they often struggle to make ends meet, most commonly because of the high cost of living and rising inflation.
“The traditional mortgage process was designed in the 1940s when the norm was a single breadwinner with a steady W-2 income. The system hasn’t changed, even though the way we work, live and form families is dramatically different. But today’s younger buyers often lack long periods of income history and are increasingly non-salaried, working as a 1099 contractor, side gig worker, or self-employed individual,” Hefets added.
“A majority of aspiring homebuyers feel that homeownership is always just beyond their reach, that the ‘American Dream’ of homeownership is slipping away, and that it would take luck, extraordinary circumstances, or a serious change in the mortgage process to make it possible for them to own a home in today’s economic climate.”
Survey methodology
This random double-opt-in survey of 2,000 non-homeowners was commissioned by Divvy Homes between June 5 and June 7, 2023. It was conducted by market research company OnePoll, whose team members are members of the Market Research Society and have corporate membership to the American Association for Public Opinion Research and the European Society for Opinion and Marketing Research.
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