CoreLogic's chief economist reports, "In addition to lower interest rates, personal income grew faster than home prices during the past year," helping to boost the homeownership rate to its highest level in more than five years.
Those low mortgage rates continue to fuel homebuyer demand, boosting another gain in overall home builder confidence. The National Association of Home Builders confidence index rose to a strong 75 read in September.
To better understand what may be driving consumers to make their first home purchases, TransUnion conducted a national survey in October 2019.
These respondents' top motivations to purchase a home included seeking more privacy (45%) and wanting to build equity/wealth (44%). Less than a quarter of respondents indicated that getting married (24%) or expanding their family (23%) would be the top reason to purchase a home. On the other hand, the number one reason respondents would delay home purchase is due to concerns of not having enough money for a down payment and/or monthly payments (58%). About half of those respondents (51%) said they believed they would need to meet a down payment requirement of 10-20%.
There has been a lot of discussion in the marketplace that younger people today may not be as interested as prior generations in buying a home and being tied down to one location. Our survey results suggest that is not the case at all.
Rather, younger people may have in fact been deterred from home purchase by challenges they faced in the financially difficult times of the last decade. Just like others before them, the younger generation seem to place value in home ownership.
Many of those respondents who said they understood the home buying process were under similar false impressions as those who said they didn't understand the home process. Two-thirds (67%) of respondents believe that a high credit score is necessary to purchase a home, and 41% of respondents believe a high down payment is required to purchase a home.
Furthermore, one in three respondents (34%) said they were not familiar with any mortgage financing options, and two-thirds of respondents were not familiar with government-sponsored enterprises (GSEs) such as Fannie Mae and Freddie Mac.
Many of our potential first-time homebuyer respondents don't seem to be aware of the wide variety of financing options available to them. It suggests there's a large opportunity for lenders to proactively identify consumers who are interested in becoming first-time homebuyers and then educating them on options they may not be aware of. Consumers may find home ownership programs that are more flexible than they originally thought.