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Housing Demand Grows as Buyers Struggle to Overcome Obstacles
Despite obstacles to home buying in today’s market, the underlying demand for homeownership remains healthy and a significant share of households say they expect to purchase a home, according to a new survey conducted by Harris Interactive for Move, Inc.
Nearly half (41%) of the current home owners who were surveyed said they did plan to purchase a home again, and 80% of all renters indicated that they expected to eventually become home owners. Forty-seven percent of the renters participating in the poll indicated that they planned to purchase a home within the next five years.
For the most part, people who are planning to move won’t be doing so for financial reasons, including a rent increase (2%) or to get out from under an expensive mortgage (less than 0.5%). Instead, they are far more likely to expect to be moving to obtain more living space (26%) and for changes related to life stages (17%), such as having children, the survey found.
Most prospective home buyers (78%) reported that they would be willing to make sacrifices to save and earn extra income for downpayments and will compromise on neighborhood features and residential amenities in order to buy a home in the current market. Many of their choices reflect changing values shaped by factors that include a growing concern over the environment, the importance of community features and the rising cost of fuel.
According to the results of the online poll, which were released on July 15, 81% of home buyers indicated that they remained nervous about the current housing market and cited significant barriers to homeownership
But 44% believe that the housing market will improve once a new president takes office next January. Forty-eight percent of women and 41% of men who plan to buy a home in the current market said they think conditions will get better once the new president is in office.
"These findings show that despite the difficulties home buyers face in the wake of the subprime crisis and their concerns about economic uncertainty, underlying demand appears relatively strong. Consumers see better times coming," said Lorna Borenstein, president of Move, Inc.
"This is great news to us and our colleagues in the real estate industry,” Borenstein said. “As the leader in online real estate, we pay close attention to consumer perceptions and behaviors. This important feedback enables us to identify ways in which we can enhance the search experience so it meets the needs of today's consumers who will become the home buyers of tomorrow."
Buyers Face Barriers to Homeownership
About four out of five home buyers (81%) said they faced barriers to buying a home in the current market, identifying the greatest single barrier as high home prices (31%), a concern that was considerably higher in the West (39%), than in the South (27%) or Midwest (26%).
The second greatest constraint for buyers in the current market is coming up with the money for a downpayment (28%), followed by lack of confidence in the economy (26%).
People in the West (45%) cited financial concerns more than Southerners (33%). About one-third of those ages 18 to 34 said they were concerned about lack of money (38%) or poor credit (18%), compared to only 11% and 5%, respectively, for those who are 55 and older. Overall, one out of three (34%) answering the survey said that money-related issues were a concern
Four out of five adults (84%) said that there was something intimidating about buying a home. Finding the right home was the most intimidating part of the home-buying process for about one out of five (19%). Nine percent identified understanding financing as the most intimidating aspect of buying a home; 6% cited the uncertainty of the mortgage process.
About two-thirds of adults (62%) said they have visited an online real estate Web site. Once on a site, 23% said they were looking to purchase and 52% said they were looking at what's on the market.
Trade-Offs Favor Community, Environment
The survey respondents ranked crime rates (56%), proximity to daily conveniences (47%) and property taxes (46%) as the top three factors in choosing a neighborhood. In order to purchase a home in the current market, prospective home buyers said that they were more willing to sacrifice cultural and recreational amenities (18%) than green features (16%) like solar heating and energy-saving appliances.
In the face of high gas prices, only 7% of home buyers would be willing to sacrifice proximity to work and 6%, proximity to shopping. Only 3% said they would give up proximity to public transportation.
About half (49%) said that green features like solar panels, energy-saving appliances and efficient water heaters were "important." Luxury amenities were called important by 31%.
Kitchens (67%) and the number of bedrooms (69%) are the most important features today's buyers are looking for in a home. Storage space (66%) and the number of bathrooms (62%) rank third and fourth on their list of priorities.
Mortgages Are a Mystery
A large number of those surveyed said that understanding mortgages and the financing process during these changing times in the credit industry is a major issue. Eighty-one percent of today's home buyers and three quarters of adults (78%) said that they wished the process of taking out a mortgage was easier to understand.
For many buyers, changes in the amount of a downpayment required for a mortgage is a significant issue. The lack of cash for a downpayment is keeping more than one-quarter (28%) of buyers out of homes — more than poor credit (15%), low household income (20%) or lack of confidence in the economy (26%).
Seventy-eight percent of home buyers said they were willing to make sacrifices to save money or earn extra income in order to be able to buy a home in the current real estate market. First to go would be spending (65%) on items such as personal luxuries (46%) and clothes, shoes and accessories (43%). Next, home buyers would go out less often (52%). Nearly half would clip coupons (47%) and 27% would cancel a vacation.
 Want to Know the Housing Forecast for the Top 100 Metros?
Find out in HousingEconomic.com’s 2008 to 2009 Metro Forecast (free preview).
Get the metro forecast with in-depth analysis, overviews and downloadable Excel tables.
To learn more, visit www.HousingEconomics.com.
 Free NAHB Kit Gives Builders Back-to-Basics Tips to Navigate the Slowdown
What was once expected to be a relatively mild housing slump following three years of record new home construction and sales has given way to a significant downturn.
To help members navigate the uncharted waters of this slowdown, NAHB has compiled a comprehensive “Back to Basics” online toolkit — the best of the basics, the tried and true and the truly new. To access the toolkit, click here.
To access the “Back to Basics” toolkit, you must be an NAHB member and have a login to www.nahb.org. To create a login, go to www.nahb.org/login or click on the log-in button on the main menu bar.
For assistance, call the NAHB Member Service Center at 800-368-5242.
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