Homeowners Remain Optimistic Despite Financial Challenges 

According to a new TD Bank study, the majority of homeowners (67%) believe that buying a home is still attainable, and 38% say they plan to buy one in the upcoming year. These results demonstrate positive sentiment toward the housing market despite growing prices and current interest rates.

More than 1,800 homeowners nationwide were polled for TD Bank’s 2024 Mortgage Service Index in order to acquire information and examine opinions regarding the mortgage and home-buying processes, as well as sentiments regarding the housing market.

According to the survey, younger generations exhibit even greater optimism: 84% of Gen Z and 68% of Millennials feel that owning a home is still achievable despite growing housing costs. Gen Xers were the most optimistic group, believing that owning a home was achievable (66%), followed by Baby Boomers (59%). Though existing house sales in the United States fell to a nearly two-decade low in 2023, these sentiments show that buyers still have faith.

“Although many of the challenges impacting homeownership are leaving some homeowners weary about the market, it’s great to see borrowers, especially younger generations, remaining steadfast in navigating the market to find a home that works for them and their budgets,” said Steve Kaminski, Head of U.S. Residential Lending for TD Bank. “Owning a home is still an important wealth vehicle for any generation and it’s reassuring that homeowners continue to see the value in this type of investment.”

Increasing Costs are Taking a Toll on Homeowners’ Personal Finances

Many home seekers have revised their budgets and savings goals in light of decreased inventory levels in a number of cities. Nearly three-quarters (73%) of respondents who said they would stay in their current house for fewer than three years raised their initial housing budgets, highlighting misplaced assumptions regarding the cost of owning. The main causes of the increase were the following: a dearth of options within their price range (31%) high borrowing rates (31%), and considerably rising housing prices in their targeted area (45%).

In addition to having an effect on housing budgets, rising homeownership prices are changing how homeowners handle their money and create long-term financial goals. Cost hikes for utilities (83%), house insurance (81%), property taxes (81%) and repairs (74%), according to homeowners, have been experienced. Due to the fact that 70% of homeowners say that the cost of homeownership has affected their capacity to properly save money or create a budget, these rising costs are placing strain on personal finances.

The burden on finances also affects homeowners’ capacity to make contributions to their 401(k)s (16%) or savings accounts (33%) and to set aside money for “fun” (33%), travel (33%) or monthly costs (27%). Additionally, over one-half (22%) stated that their capacity to invest has been hampered by the expense of homeownership. Furthermore, 32% of homeowners have cut back on or ceased saving for retirement in order to pay for a down payment or other housing expenses. This is a particularly common tendency among younger homeowners: 38% of Millennials and 3 out of 5 Gen Z homeowners have reduced or ceased contributing to their 401(k), IRA, or other retirement accounts in order to save for a down payment or home budget.

Buying a Home is More Stressful Than Ever, but Experienced Advice Helps

Purchasing a new house was stressful for seven out of ten homeowners (71%)—a rise from 64% of respondents in 2023. Furthermore, compared to 60% of Baby Boomers who would already be familiar with the steps involved in buying a property, 82% of Gen Z reported feeling stressed.

Throughout the process, homebuyers may feel more secure in their decisions thanks in part to their education. During the mortgage process, two out of five homeowners (43%) thought they needed the greatest information and assistance. Almost one-quarter (24%) of them said they needed it most when choosing a loan option. Although 83% of respondents thought they had sufficient tools to educate themselves, 39% of respondents were still uninformed about mortgage affordability and lending programs, indicating a knowledge gap in the homebuying process.

To read the full report, click here.

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Demetria C. Lester

Demetria C. Lester is a reporter for MortgagePoint (formerly DS News and MReport) with more than eight years of writing and editing experience. She has served as content coordinator and copy editor for the Los Angeles Daily News and the Orange County Register, in addition to 11 other Southern California publications. A former editor-in-chief at Northlake College and staff writer at her alma mater, the University of Texas at Arlington, she has covered events such as the Byron Nelson and Pac-12 Conferences, progressing into her freelance work with the Dallas Wings and D Magazine. Currently located in Dallas, Lester is a jazz aficionado, Harry Potter fanatic, and avid record collector. She can be reached at demetria.lester@thefivestar.com.
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