Prospective homebuyers’ patience may be waning, with fewer willing to wait until home prices or interest rates come down to purchase a home, according to new data from the Bank of America (NYSE: BAC) Homebuyer Insights Report.
Today, 62% are willing to “wait for prices and/or rates to fall before buying a home, down from 85% just six months ago. And they seem to be taking action: Sales of new single-family houses in September 2023 were a seasonally adjusted 759,000 – up from 679,00 sales in April 2023.”
Matt Vernon, head of consumer lending at Bank of America, said:
“When it comes down to it, if buying a home is your goal and within your budget, the best time to buy is when you’re ready financially and you can find a home that fits your needs. Even in the current interest rate environment, there are clear benefits to purchasing a home and beginning to build equity.”
This latest research also explores what buyers “would be willing to forgo in order to buy sooner, and what would motivate current homeowners to sell.”
Approximately 80% of outstanding U.S. mortgages “have an interest rate below 5%.2 This gives homeowners an incentive to stay put because the average 30-year fixed mortgage rate hit 8% in October of this year.3 Younger people, Millennials in particular, are being hurt disproportionally by this trend, according to Bank of America Institute’s newly released Housing Morsel. The rate disparity is compressing the already limited supply of houses for sale, and begs the question: What does inspire homeowners to sell and free up inventory for would-be homebuyers in today’s environment?”
Half of current homeowners say they’d be “prompted to sell if their dream home became available (50%) and/or if they found a more affordable area (54%) – even if it meant paying a higher interest rate for a new mortgage.”
Additional motivations for some, but not as many, to move and give up their current mortgage rate include:
- Job opportunity or job relocation – 40%
- Nicer neighborhood amenities – 40%
- The need for a larger home or more rooms – 38%
- A social community to be a part of – 32%
- A desire to be adventurous and move to a new area – 28%
- Moving to a home with rental potential – 21%
In fact, millions of people are moving to areas, “including the Sun Belt (PDF) , where they can afford to buy a home.”
Those surveyed say the following could or already has motivated them to move from one state to another:
- Cost of living – 60%
- Career/job reasons – 44%
- Family and relationships – 37%
- Affordability of housing– 33%
- Safety concerns – 27%
- Retirement – 25%
- Adventure and exploration – 20%
Work-related reasons may also inspire homeowners “to sell in this market, and work is a major driver of out-of-state moves.”
Those who have or would move “to a new state for their careers are driven by increased job opportunities (57%), job requirements to relocate (29%) or the fact that they can work remotely and are no longer tied to an office (28%).”
For survey methodology and other details, check here.
