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First-Time Buyers More Likely to Take Financial Risks

American homebuyers persevered through high prices and fierce competition in 2021 and 2022, but few landed their dream home as 80% reported compromising on their priorities, according to a new report from Anytime Estimate. First-timers paid a median of $77,500 over the listing price, while repeat buyers offered only $60,000. Although finding an affordable home was the second-most important priority among home buyers compared to the first —which was finding a home in a good neighborhood— more than 57% of survey respondents purchased a home that cost more than the national median price of $428,700.The most common sacrifice buyers made was on price. Additionally, approximately half of buyers —or 45% — wanted an affordable home, but more than 35% had to offer a higher price.

Despite high prices, low inventory and fierce competition over the past two years, buyers have persevered through the challenging market. Yet few came away with their dream home —especially first-timers who accounted for 70% of buyers in 2021 and 2022. Of those shares, approximately 66% were millennials who were eager to own homes to raise their families. Due to this competitive market and lack of inventory, many Americans were forced to compromise in order to afford a home.

Although 50% of respondents said that finding a home in a good neighborhood was their number one priority, 20% reported settling for a home in a less-desirable neighborhood. To keep up with the fast-paced market, 80% of buyers made more than one offer, with 41% making five or more. In addition, house hunts took one month or more for 61% of buyers, including 12% who looked for six months or longer before their offer was accepted.

Key Findings:

  • Some 70% of buyers in 2021–2022 bought a home for the first time. Among new buyers, one-third (33%) thought the process was more difficult than expected.
  • Nearly 1 in 4 buyers (22%) were not satisfied with their home-buying experience.
  • Survey respondents paid a median amount of $495,000 for their home —about 15% more than the national median of $428,700.
  • Almost one-third of buyers (31%) paid over asking price. The median amount buyers paid over the listing price was $65,000.
  • Approximately 80% of buyers made more than one offer, with 41% making five or more. More than 1 in 3 buyers (36%) made an offer on a home sight unseen.
  • 1 in 3 buyers spent three months looking for a home, while 1 in 8 spent six months or more.
  • Some 80% of homebuyers had to compromise on their priorities. The No. 1 priority for half of buyers (50%) was finding a home in a good neighborhood, but 1 in 5 (20%) settled for a home in a worse location.
  • Three-fourths of home buyers (72%) have regrets about their home purchase, with 1 in 3 (30%) saying they spent too much money.
  • More than half of buyers (55%) bought a fixer-upper, but 1 in 4 (24%) regret it.
  • 1 in 10 buyers paid for their home in cash, with nearly half of all-cash buyers (43%) saying they make enough money to afford it. But 29% of all-cash buyers had to withdraw money from savings, and 27% had to borrow funds from their investments.
  • Of those who financed, 40% of buyers put down less than or equal to 20% on their home.

Even with compromising on their home wish list, one-third of buyers still paid over asking price, including 1 in 8 Americans who paid more than 30% over asking price. Although realtors typically recommend offering no more than 1-3% over asking price, 29% of respondents who paid over asking price reported paying 21-30% more, and 12% reported paying at least 30% more.

In the past, real estate agents have suggested offering 1%–3% more than the asking price, but today's home buyers are exceeding that recommendation to beat the competition. Of those who paid more than asking price:

  • 1 in 3 offered 1%–10% over the asking price.
  • 1 in 4 offered 11%–20% over the asking price.
  • 1 in 3 offered 21%–30% over the asking price.

Of those who submitted multiple offers, approximately 41% made an offer on five or more homes, and 1 in 10 made an offer on 10 or more homes.

First-time home buyers dominated the market in 2021 and 2022, with 70% of recent buyers indicating they were making their first home purchase. First-time buyers struggled to submit attractive offers, as they were 1.6x more likely than repeat buyers to submit at least 10 offers and to make risky moves such as making an offer sight unseen. First-timers also paid a median of $510,000 for a home in 2021 and 2022 —roughly 13% more than the $450,000 that repeat buyers paid.

The survey also revealed that nearly one-fourth of all buyers —or 22%— weren't satisfied with their home-buying experience, and 88% said the competitive housing market impacted their experience. Forced to make decisions on the spot, it comes as no surprise that nearly 3 in 4 recent home buyers have regrets about their purchase, including spending too much (30%) and buying too quickly at (26%).

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

About Author: Demetria Lester

Demetria C. Lester is a reporter for DS News and MReport, with more than six years of writing experience. She has served as 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, Pac-12 Conferences, the Women in Dallas Film Festival, to freelance work with the Dallas Wings and D Magazine. Currently located in Dallas, Texas, she is an avid jazz lover and reader. She can be reached at [email protected]
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