Low prices and rock bottom interest rates have lured many people into buying a home, but many potential homeowners are resisting the bait. The obvious explanation would be the terrible state of the economy; some people simply cannot take advantage of the affordability in the real estate market. Yet recent surveys paint a different picture. It’s not the economy, or at least, not just the economy.
The economic and financial turmoil both at home and abroad has done much more than affect wallets, it has altered perceptions. Today’s young consumers are considering more practical matters before they take the plunge into homeownership. The “get it now” attitude of the turn of millennium has become a far more cautious “get ready.”
According to a recent survey by The Nest, the number one reason for waiting to buy a home is saving for a down payment. A large down payment makes it easier to get a loan in the post-bubble mortgage market, and helps qualify buyers for lower, more attractive interest rates.
Of the people polled, 32% are holding off on buying a home because they are not sure they will stay put for the next five years. Changes in work, school, and family needs, along with a host of personal motivations, are causing people to think twice before committing to an area. Uprooting the family or gambling on ‘house flipping’ is a risk few potential homeowners are willing to take. Whatever the reason, many people are waiting to buy until they are ready to stay.
There were more surprising findings in the poll. Over 90% continue to see real estate as a good investment while only 68% think buying a home signifies the achievement of the American Dream. That is quite a contrast from the fear of a failing economy explanation. In fact, of those polled who were currently renting, 94% plan to buy a house soon, most within the next five years. Only 2% of those polled cited the economy as a reason to not buy their first home.
Despite all of the fear being reported in the media, fear is not controlling for potential homeowners; intelligent planning is. The next generation seems determined to avoid the pitfalls that led to the housing crisis. Saving for a significant down payment and making sure that they will be ready to settle into one place for a period of time is a sign that they are looking carefully before they leap.
Smart homebuyers are a hopeful sign for the future stability of the housing market. With buyers carefully considering the affordability and sustainability of their mortgage, there is hope that the era of foreclosures may be over. Some people are still waiting to buy, and that is great news.
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