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Younger House-Hunters Remain Confident in a Predominantly Seller’s Market

Many hopeful homebuyers – especially those in their 40s and younger – are forging ahead with plans to buy homes despite believing the market now favors sellers, according to Bank of America’s 2023 Homebuyer Insights Report. While some 55% of prospective homebuyers surveyed believe the market is more competitive than last year, 54% plan to either hasten their home purchases or buy when they originally planned, including 62% of Gen Z and 55% of millennial homebuyers.

However, not all prospective homebuyers are jumping in. Two in five surveyed Americans —or 39%— believe this is a seller’s market, while 18% say it’s a buyer’s market, and 31% believe it’s neither. Homebuying challenges included high prices and interest rates (51%); lack of cash reserves for down payments (37%); and low credit scores (37%). Meanwhile, nearly 40% of those prospective homebuyers said they feel more confident in their ability to buy a home today versus last year, compared to 26% who are less confident and 28% who feel about the same.

“The market is less frenzied as rates have moderated, and that may be impacting perception,” said Matt Vernon, head of retail lending at Bank of America. “And low inventory is still creating a highly competitive environment. Homebuyers are doing the right thing by taking time to understand the market, weigh their priorities and determine what fits into their budgets.”

According to the report, financial security is a motivating force, as homeownership has historically helped families build long term-wealth. Despite their younger age, 56% of Gen Z and 56% of surveyed millennial house-hunters plan to purchase in the next two years — nearly on par with Gen X at 58%. Some 47% of all prospective homebuyers say they would buy a home in the current housing market because they are tired of renting and of rent increases, while 28% report they want to start building equity.

Prospective homebuyers said they’d be willing to put up to 25% of their monthly income toward mortgage payments for a starter home and 30% for a forever home, compared to the 29% they’d be willing to put toward monthly rent. Roughly 55% prospective homebuyers plan to purchase a home with a spouse or partner while 38% say they’re planning to go in alone.

Real Estate Curiosity Keeping Those on the Sidelines Active

Even hopeful homebuyers who may be waiting for the housing market to cool are still forging ahead in their own way. More than two-thirds (67%) of prospective buyers are actively looking at homes for sale – whether they’re scrolling through a real estate marketplace app with a certain budget in mind (52%) and/or visiting open house events for fun (31%).

Those scanning for homes find it to be an enjoyable pastime (41%), a way to dream about their future home (37%) and a window into how others have decorated their spaces (32%). Beyond simply looking for inspiration, two-thirds (65%) of those who scroll through listings are interested in what their current budget would get them if they were to buy today.

Talking with friends and family can also provide first-hand accounts of potential hurdles and valuable resources during the homebuying journey. Some 82% of Americans surveyed say they are comfortable talking with friends about how they came up with their down payment, but only 17% have directly asked a friend how they were able to afford the upfront costs. The sharing of information can be invaluable as only 39% of prospective homebuyers know how to find down payment assistance programs.

When buying a home, there are many factors to consider. Although hopeful homebuyers remain confident in a predominantly seller's market, competition and homebuying challenges persist.

To read the full report, including more data, a video presentation and methodology, click here.

About Author: Demetria Lester

Demetria C. Lester is a reporter for DS News and MReport magazines with more than eight years of writing experience. She has served as content coordinator and copy editor for the Los Angeles Daily News and the Orange County Register, in addition to 11 other Southern California publications. A former editor-in-chief at Northlake College and staff writer at her alma mater, the University of Texas at Arlington, she has covered events such as the Byron Nelson and Pac-12 Conferences, progressing into her freelance work with the Dallas Wings and D Magazine. Currently located in Dallas, Texas, Lester is an avid jazz lover and likes to read. She can be reached at [email protected].

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