Many Americans Remain Misinformed About Interest Rates, Home Prices

According to a new study from Real Estate Witch, Americans remain exceedingly misinformed about home prices—as 73% don't think homes are affordable right now, yet 60% actually underestimate the median home sale price.

Just 1 in 7 Americans—an estimated 14%—know the current median home price falls between $400,000 and $499,000. Some 23% believe the median home costs between $200,000 and $299,999, while another 23% think it costs between $300,000 and $399,999.

Despite underestimating current home prices, 76% of non-homeowners are concerned about rising home prices.

New research showed that just 12% of Americans know the current interest rate for a 30-year mortgage sits around 7%. Roughly 43% believe the rate is higher, with 1 in 4—or 26%—believing it exceeds 10%.

Although a third of non-homeowners (31%) say they're knowledgeable about the home-buying process and 43% say they're knowledgeable about mortgages, 62% wrongly think it's required to put down 20% on a home. In fact, 21% believe buyers need to put down more than 20%.

Homebuyers are required to pay private mortgage insurance (PMI) if they don't put 20% down. However, 85% of Americans don't know what PMI is—including 83% of current homeowners.

Data found about one-third of Americans (32%) say a credit score of at least 700 is necessary to purchase a home. In reality, homebuyers can qualify for a conventional loan with a score of 620.

 

The seller typically pays agent commission for the homebuyer, but 62% of Americans think the buyer pays their agent's commission. This misunderstanding could be why 65% of Americans wrongly think homebuyers can save money by not working with a real estate agent.

The survey also found that respondents underestimated the age of the average homebuyer: The average age of a first-time buyer is 36, but 73% believed it was younger.

With misinformation being dispersed left and right, it's not surprising that 83% of homeowners were surprised by parts of the home-buying process — 65% had to adjust their budget, and 63% had to adjust their priorities.

To read the full report, including more data, charts, and methodology, click here.