New data from the National Association of Realtors (NAR) may help us better understand why homebuyers are hesitant to jump on the buying train.
In its third-quarter Housing Opportunities and Market Experience survey, NAR reports that 78% of homeowners and 60% of renters say now is a good time to buy. That’s down from 80% and 62%, respectively, in the previous quarter.
Part of the reason for this decrease in buyer’s confidence is the low levels of housing supply and rising prices, according to NAR chief economist Lawrence Yun. As interest rates hit historically low levels over the summer, demand increased. But there just aren’t enough homes on the market to keep a lid on pricing.
“Given the stiff competition and limited homes available at the lower end of the market, it’s not surprising at all that those under the age of 34 and in the West are the least confident about it being a good time to buy,” Yun said.
But according to Yun, another factor leading many buyers — especially younger ones — to the decision not to buy may be a lack of knowledge about different mortgage financing options that are available.
Across all ages, fewer than 20% say that they would need just a 10% down payment to finance a home purchase. And 43% of those 65 and older and 37% of those below the age of 35 think a down payment above 20% is required. The average median down payment for first-time buyers, according to the NAR’s Profile of Home Buyers and Sellers, is only 5%.
Even with conventional programs with as little as 1% down using private mortgage insurance, as well as the government’s Federal Housing Administration and Department of Veterans Affairs programs with little/no down payment requirements, more and more buyers are turning to family for loans, rather than lenders. The NAR reports that 19% of current homeowners received some form of down-payment assistance from a parent or relative, and that figure shot up to 34% for homeowners under 35.
Skyline Home Loans is here to help you or a loved one with an appropriate and affordable loan for a home purchase.
Source: National Mortgage News