New Study from National Association of REALTORS® Reveals Biggest Obstacles to Homebuying
A lack of affordable housing is the biggest obstacle to buying a home in the United States today — a product of the current housing market, which has been defined by soaring home prices and incredibly low inventory, according to a new study from the National Association of REALTORS®.
While the lack of affordable housing is the more significant challenge for buyers of all races and ethnicities, other obstacles to homeownership varied by race and ethnicity, the report found.
“Record-high home prices and record-low inventory have made the home buying process exceedingly difficult,” said Dr. Jessica Lautz, NAR’s Vice President of Demographics and Behavioral Insights. “Our new study shows that while the inventory crisis is affecting potential buyers of every race, nearly all home buyers agree that homeownership is still an important part of the American Dream.”
The State of the Housing Market
Over the past two years, soaring home prices and record-low inventory have combined to create an incredibly competitive housing market. Many prospective homebuyers — especially first-time homebuyers — are feeling like their dreams of homeownership are out of reach.
In fact, a recent Gallup poll found that only 30% of Americans believe now is a good time to buy a house, MarketWatch reported.
That’s an astonishingly low number, illustrating how frustrated and discouraged Americans are by the housing market amid rising home prices — and, more recently, rising mortgage rates.
“It’s the lowest level on record since Gallup began surveying Americans on this question beginning in 1978, and it’s the first time less than 50% of people across the country thought it was a good time to buy,” MarketWatch reported.
But the vast majority of people surveyed in NAR’s report said that homeownership is still “the American Dream.”
Despite the obstacles to homeownership identified in the report — including lack of affordable homes, a lack of homes that fit the buyer’s criteria, competing with multiple offers, and saving for a down payment — many Americans still desperately want to own a home.
Obstacles to Homeownership
A lack of affordable homes was the biggest obstacle for potential homebuyers, regardless of ethnicity, NAR’s report says.
For White and Asian Americans, the second-largest obstacle was a lack of houses that fit their criteria, the report says. For Hispanic Americans, it was difficultly saving for a down payment, and for Black Americans, it was a lack of credit or other credit issues.
Potential homebuyers’ frustration with the lack of affordable homes is understandable in this housing market, with homes selling for well over their listing price, sparking fierce competition among buyers.
Those who successfully purchased a home experienced similar obstacles. White, Black, and Asian buyers said their biggest obstacle was a lack of affordable homes, while Hispanic buyers said it was a lack of houses that fit their criteria.
The affordable housing crisis has worsened in recent years as home prices have dramatically increased across the country. In March 2022, the median sale price was $412,156, up from $351,883 a year earlier, a 17.1% increase, according to Redfin.
Of course, the increase in home values is good news for homeowners. After all, over the past two years, Americans who own their homes have gained more than $6 trillion in housing wealth, largely because home prices have appreciated at a record pace, The New York Times reported. But for potential homebuyers, it can feel like the odds are stacked against them.
“In the current hot market, people who have traditionally enjoyed homeownership can capitalize on those gains to realize new opportunities. Meanwhile, the market becomes increasingly unaffordable, and the obstacles greater, for those trying to enter the market,” said Bryan Greene, NAR’s Vice President of Policy Advocacy.
“NAR advocates not only for existing homeowners, but also for those aspiring homeowners whose entrance into the market is necessary for the economy to thrive.”
The report also concluded that when people face obstacles during the homebuying process, it’s often due to the market, not due to their real estate agent.
Both potential and successful homebuyers were more likely to say that they had faced obstacles related to the housing market than obstacles related to their real estate agent, such as an agent not listening to their needs or not showing them all the potential homes.
What obstacles have your clients faced when trying to buy a home in this hot market? Tell us in the comments below!
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