- 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% |
| Other | 2% |
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.”
Methodology:
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 pr@creditkarma.com.