By all available means, data and metrics, housing prices continue to soar. The growth seen by the typical single-family home over the past two years has been meteoric and surprisingly steady and at some point something has to give, and it looks like affordability was the first to fall.
These data come from a survey commissioned by The bank rate and led by YouGov Plc which features email responses from 2,530 people over the course of three days from March 2-4. The sample size was chosen to be representative of the entire population.
Overall, the latest survey found that respondents highly value the stability of single-family home ownership and view it as a key indicator of economic strength. It also revealed that respondents who did not own a home felt that soaring prices amid rising interest rates were holding them back from home ownership.
“Non-homeowners cite insufficient income, high home prices, and the inability to pay a down payment or closing costs as the most common barriers to homeownership,” says Greg McBride, chief financial analyst at Bankrate. “High and rising home prices can contribute to feelings of not having enough income or accumulated savings to buy a home.”
While many during the pandemic reassessed their living situation, the majority of respondents confirmed that they were happy with their current situation.
“Nearly three in four homeowners say they would still buy their current home if they had to start all over again,” McBride continued. “Paying off debt, building up savings, and knowing the limits of what you can afford provide the stable financial foundation on which no-regrets homeownership rests.
Home ownership is at the heart of the American Dream
According to the survey, 74% of respondents ranked owning a home first as the main characteristic of economic prosperity. Next comes the possibility of retiring (66%); a successful career (60%); owning a car (50%); having children (40%); and obtain a university degree (35%).
In addition, data on home ownership was relatively consistent across all age groups above 26. The only generation that didn’t rank homeownership in the top spot was Gen Z (now 18-25), but they still ranked it just behind; their first choice as having a successful career (60%).
Most homeowners would buy the same house again
The majority of homeowners like their current living situation enough that 72% say they would buy their current home again if given the chance and had no intention of moving. 18% said they would look for alternative accommodation, while 10% were undecided.
These results cast doubt on what has been considered free housing for all nationwide since the start of the pandemic; while remote work has allowed many Americans to move away, most, the data shows, are content to stay in their current homes.
Affordability is a challenge
It’s a simple fact that as home prices have skyrocketed recently, it’s becoming increasingly difficult to find a home as declining affordability kicks in. 52.2% of homes sold in during the fourth quarter of 2021 were affordable for families earning a typical income. That number was 66% at the start of the pandemic, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index.
And the affordability gap has only widened as inventories hit record highs in January, pushing prices even further.
For respondents who did not own a house, the main reason was due to their low income (43%); house prices out of reach (39%); inability to pay a deposit and closing costs (36%); bad credit (22%); not ready to settle down (22%); high interest rates (17%); lack of available housing (13%); and having too much debt (14%). The remaining 14% of respondents indicated that they had never wanted to own a home.
Many who can’t afford a home are throwing in the towel
Respondents were also asked how far they would go to find affordable housing. 42% said they would not do anything to find affordable housing; 27% said they would move out of state; 21% said they would buy a repairer; 20% would distance themselves from family and friends; 13% would take more time away from their work; and 11% would move to a less popular area.
To view a full copy of the study, including interactive data, Click here.