- Nearly two-thirds of prospective home buyers (64%), defined as those who plan to buy a home in the next three years, say they are ready for a recession if that means interest rates will fall, so they are better able to afford purchasing a home.
- More than 4 in 5 Americans (82%) believe the country is facing an unprecedented housing affordability crisis.
- More than 3 in 5 Americans who have never purchased a home (61%) don’t think they will ever be able to afford to purchase a home.
The housing market has been in an ongoing state of turbulence, resulting in an affordability crisis that is likely keeping many prospective buyers on the sidelines. As buyers face decades-high mortgage rates, many Americans are met with concerns that they’ll never be able to afford a home, while others are making sacrifices to achieve the American dream.
According to a new study conducted by The Harris Poll on behalf of Intuit Credit Karma among 2,053 US adults ages 18+, more than 4 in 5 Americans (82%) believe the country is facing an unprecedented housing affordability crisis. Perhaps that’s why more than 3 in 5 Americans who have never purchased a home (61%) don’t think they’ll ever be able to afford to do so.
Younger Americans are disproportionately impacted by the current housing crisis, and it’s not just Gen Z (ages 18-26) and millennials (ages 27-42) who think they’re getting the short end of the stick. A majority of Americans (77%) think it is more difficult for younger generations to buy their first home compared to older generations, with Boomers (ages 59-77) more likely to feel this way compared to millennials and Gen X (81% vs. 75% millennials & 74% Gen X ages 43-58).
What lengths did recent home buyers go in order to purchase a home?
The housing affordability crisis is so dire that almost two thirds of prospective home buyers (64%) say they are ready for a recession if it means interest rates will go down, enabling them to better afford a home.
For recent buyers who were motivated enough to take the plunge amid high interest rates, homeownership didn’t happen without sacrifice. Of the 13% percent of Americans who are recent home buyers (those who bought a home in the past two years), 82% say they made sacrifices in order to purchase their most recent home. Here’s a breakdown of the sacrifices recent home buyers made to get into a home:
|Paid more for a home than they budgeted for||30%|
|Limited or stopped spending on non-necessities||26%|
|Took on a side gig to make more money||25%|
|Put life events (e.g. wedding, having children, vacation) on hold||22%|
|Moved in with family or friends to build up savings||16%|
|Gave up certain desired home features||24%|
|Bought a smaller home than they wanted||23%|
|Bought outside their ideal home location||21%|
Can recent home buyers actually afford their new home?
More than 2 in 5 recent home buyers (45%), defined as those who bought in the last two years, say they are struggling to afford their monthly mortgage payments due to high interest rates. For those who recently purchased a home, 36% used money from savings, 32% used money from another home sale, 17% paid in all cash, 17% used money gifted from family (including 23% of millennials), 9% took out an adjustable-rate mortgage (ARM) and 9% did a mortgage rate buy-down.
Prospective buyers still have plans to buy – what’s their strategy?
Regardless of the current housing market, plenty of Americans still plan to purchase a home in the coming years with 29% planning to do so in the next three years, 19% planning to do so in the next two years, and 8% planning to do so in the next 12 months. Gen Z and millennials are more likely than Gen X and Boomers to say they plan to purchase a home in the next three years (42% and 48% v. 24% & 11%) and in the next two years (30% each vs. 17% & 9%).
Prospective home buyers, including first-time buyers, grappling with high interest rates are having to get creative with their home buying strategy. Here’s a breakdown of how home buying strategies shake out for those looking to buy:
|What actions would you be willing to take to buy a home in the current housing market?||Prospective buyers||First-time prospective buyers|
|Take on a side gig to make extra money||38%||50%|
|Limit/stop spending on non-necessities||38%||37%|
|Do a mortgage rate buy-down||31%||30%|
|Lock in a mortgage at a higher interest rate than preferred in hopes they will drop so they can refinance||29%||23%|
|Pay more than they budget for||19%||11%|
|Put life events (e.g. wedding, having children, vacation) on hold||17%||18%|
|Move in with family/friends to build up savings||17%||26%|
|Get an adjustable-rate mortgage (ARM)||27%||25%|
|Give up desired home features||23%||24%|
|Buy outside of ideal home location||27%||31%|
|Buy a smaller house than desired||27%||29%|
“There is no denying how difficult it’s become to purchase a home in America today, especially for first-time buyers,” said Aniva Hinduja, general manager of home and mortgage at Credit Karma. “When a majority of potential home buyers are wishing for a recession so they can afford a mortgage, you know the situation is dire. Prospective buyers should be diligent when budgeting for a home, taking into account how much they’ll pay each month in mortgage interest and factoring in other financial obligations they have at a time when borrowing costs are high. They should also give a lot of thought to what potential risks they’re willing to take on to purchase a home in today’s market. For instance, while taking out an adjustable-rate mortgage (ARM) might ease some of the financial burden at the onset of a loan term, borrowers need to make sure they’ll be able to afford their new monthly payments once their rate switches from fixed to variable.”
This survey was conducted online within the United States by The Harris Poll on behalf of Intuit Credit Karma between May 24-26, 2023 among 2,053 adults ages 18+, among whom 264 have purchased a home in the past 2 years, and 579 plan to purchase a home in the next 3 years. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. The sample data is accurate to within +/- 2.7 percentage points using a 95% confidence level. This credible interval will be wider among subsets of the surveyed population of interest. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact email@example.com.