Homeownership has long been perceived as an essential part of the American dream, but is a lack of affordability weakening demand?
A new report from Bankrate indicates that 79% of Americans believe owning a home is a “hallmark” achievement of the American dream. However, data also suggests many are struggling to achieve this dream.
“Forty-one percent of Americans who don’t own a home say they cannot afford a down payment and closing costs, and one-third cite high home prices as a major obstacle,” Bankrate writes.
“About 50% of respondents who don’t own a home say they can’t afford a home purchase because of their income,” Bankrate writes. “That sentiment mirrors data showing the wide disparity between home prices and incomes in many areas.”
So, what about current homeowners? Bankrate says they are also grappling with affordability concerns.
According to the company’s data, 44% of homeowners said they had regrets about their home purchases, naming unexpected maintenance or hidden costs as their biggest pain points.
Financial planner Luis Rosa said paying for these expenses can be a shock to new homeowners’ wallets after making a sizable down payment and shelling out cash for closing costs.
"When you buy a house, you can’t call the maintenance company or a landlord to fix major issues; it’s all on you,” Rosa said. “These expenses – needing a new air conditioner, furnace or water heater, for example – often take first-time buyers by surprise.”
This probably explains why Bankrate’s data also reveals 63% of Millennial homeowners, those who are often first-time buyers, expressed regrets about their home purchases.
This is alarming as recent data from Realtor.com indicates that by the end of 2018, Millennials represented 45% of all new mortgages. Furthermore, data from the U.S. Census Bureau and First American suggests Millennials are expected to purchase at least 10 million homes within the next 10 years.
NOTE: Bankrate’s report is based on commissioned survey data from YouGov. Approximately 2,668 adults, including 1,493 homeowners were surveyed for this analysis, which was conducted from Jan. 30 through Feb. 1, 2019.