This summer, worries about housing affordability are growing more predominant, according to a Redfin survey of more than 1,800 homebuyers conducted in August.
More than 28 percent of homebuyers said “prices are rising or are too high,” when asked their biggest concern about the housing market, the highest number in the past year.
The gap between affordability and other concerns has also widened. The second-most cited top concern was “too much competition from other buyers,” at only 13 percent, followed by a lack of homes to choose from, at 12.4 percent. Just over 10 percent of respondents said they had “no major concerns” about buying. No other response was in double digits.
In previous surveys, the second- and third-most cited concerns made up a far higher percentage of total responses. Last year it was 31.4 percent, while in May it was 33.5 percent. In other words, affordability is gaining prominence as the number one concern among buyers.
Among millennials—homebuyers 35 and younger—affordability worries were even more acute, with 32.5 percent citing it as their top concern and 10.3 saying they might not have enough money for a down payment. Only 7 percent said they had no concerns about the process.
Despite the increased concern about affordability, only 8 percent of all respondents felt home prices would rise 5 percent or more in the next six months. Two thirds thought prices would increase 2 percent to 5 percent or remain about the same. Thirteen percent felt prices would drop, while another thirteen percent were unsure where prices might head.
High Rent Driving Tenants to Become Owners
Nearly half of all first-time homebuyers, 45.4 percent, said they were most influenced to get into the housing market because of high rent. In comparison, a year ago 24.7 percent of first-time buyers said they were house hunting because of high rent.
Among all buyers surveyed, 22 percent said the cost of rent motivated them to get into the market, up substantially from last year’s 12.8 percent but down from 24.4 percent in May.
Overall, 26.3 percent of all buyers said they were most influenced to purchase because of a recent life event, like the birth of a child or a marriage, an identical number to last August.
Millennials Want Good Schools, Easy Commutes, Green Space and Walkability
After price and size, the most sought-after feature was the quality, design and layout of a home, with 44.6 percent of homebuyers choosing it as one of the three main factors they look for when shopping.
Millennials, in contrast, sought school quality, with 43.4 percent choosing it, five percentage points higher than all respondents. Millennials also preferred easy commutes, a yard or green space and walkability compared to respondents at large.
Macroeconomics and Politics Aren’t Seen as Factors in Buying a Home
Despite the recent Brexit vote and a surging stock market, over eight in ten homebuyers felt these external financial factors had little influence over their personal decision to buy, while fewer than three in ten felt housing was an important political issue for them this year.
As one buyer in Boston wrote, “The world at large does not change my family’s need for a long-term home,” reflecting the sentiment of many, though not all, respondents.
Of the buyers surveyed, 29.4 percent said they are more inclined to buy now compared to a year ago, up one percentage point from last August.
Twenty-six percent of buyers felt an increased urgency to buy before prices or mortgage rates rose, down six percentage points from this time last year, while 31.3 percent reported no change in their attitude towards buying, up two percentage points from last year.
About the Survey
This Redfin survey was conducted between August 7 and 15 and includes responses from 1887 homebuyers in 41 states and Washington, D.C.