First-time homeowners set sights high
First-time homebuyers are still facing a tough road to homeownership, but it’s one that they are willing to overcome, according to a new study released by TD Bank.
The survey, which polled 1,002 consumers who are not homeowners but are considering purchasing their first home within the next five years, provided some insight into what first-time homebuyers want out of their homes, how they intend to purchase them and what is preventing them from making the purchase.
The first thing the report looked at is the type and location of homes that prospective first-time homebuyers are looking for. Sixty-eight percent of first-time homebuyers are looking at move-in ready homes, while the remaining 32 percent would like to buy fixer-uppers. Forty-three percent are looking to buy their home in a suburban area, rather than the 20 percent who are looking to buy in urban ares. Amenities also provide insight, with respondents more interested in their first home having a backyard or pool and an attractive design over being energy efficient, or having smart home technology.
Millennials Weighed Down by Lack of Savings, Debt
Sixty-two percent of respondents expressed a desire to place a down payment of 20 percent or more on their first home. To do so, the report stated that first-time homebuyers most often considered cash savings, a 30-year mortgage, affordability programs and government loans.
There are many barriers blocking first-time homeowners. We’ve reported before on how, despite down payment requirements falling, first-time homebuyers are slow to enter the market.
When asked what was preventing them from purchasing a home, 64 percent of respondents cited needing to save money for a down payment. Additionally, 45 percent of respondents said they could not purchase a home because they needed to pay down debt.
Millennials have it even worse than the overall survey population. Seventy percent of Millennial respondents said they need to save for a down payment, and 52 percent said they need to pay down debt. Those findings are similar to those found in previous studies, and a federal study from Feb. underscored their plight, reporting that in all 48 mainland states 20 to 30 percent of 25-year-old millennials were living at home with their parents.
Blockers to Hispanic Homeownership
TD Bank’s survey also specifically examined issues surrounding Hispanic homeownership, given the fact that four out of every 10 U.S. households will be headed by someone of Hispanic descent by 2020. Their findings included:
- Thirty-two percent of Hispanic first-time buyers are searching for a home in an urban area, compared to 20 percent for the general population.
- Hispanic responders were more likely than the general population to make a home purchase with a partner or spouse compared to the general population (71 percent versus 56 percent).
- Hispanics are more likely than the general population to consider affordability programs (46 percent versus 38 percent).
- The top four blockers for Hispanics purchasing a home are saving money for a down payment, paying down debt, steady employment and finding a home in their price range.