Survey: Young Adults Underestimate Costs of Homeownership
Young adults may be missing some key information to move forward in the housing market. For example, two out of three young adults recently surveyed say they are waiting for lower mortgage rates to start the homebuying process, according to a survey of 1,000 non-owner millennials (between the ages of 25 to 40) conducted by Lombardo Homes. However, economists have largely predicted that mortgage rates will soon start to edge upwards in the coming weeks, moving higher from their current lows below 3%.
With mortgage rates already near historic lows, this “may speak to a lack of education and awareness among this cohort of home buyers,” the survey notes.
Also, many young adults are underestimating how much they need for homeownership, the survey finds. Millennials underestimated how much home they can afford right now, how much interest they would pay over a 30-year mortgage, and how much home values appreciate, on average, over 10 years, the survey notes.
Consumers surveyed also showed a lack of knowledge over average home prices and property taxes in their local area. Fifty-nine percent of consumers surveyed did not know that the seller tends to pay all the real estate agent fees. Respondents also showed lots of confusion over many real estate terms.
Regardless of some of the confusion, 83% of respondents say they are actively saving for a home right now. But high rents may be standing in their way from making any major progress. Seventy-one percent say their rent is so high it’s hard to accumulate savings for buying a home.
Other top reasons millennials say they haven’t bought a home yet are: “Can’t afford a down payment” (85%); “can’t afford something nice enough to compel me to buy” (67%); “want to be flexible, not tied to one area” (63%); and “not ready for the commitment” (62%).
“Renting vs. Buying 101,” Lombardo Homes (May 13, 2021)