The snow is melting, flowers are blooming, and the smell of spring is in the air (in most areas). Spring means growth and for many, it means the start of their home search.
As we gear up for what is going to be one of the most competitive home buying seasons in history, we asked potential home buyers how they felt about the looming house hunting season.
We surveyed 1,000 active buyers in March on their views of the market this year through Toluna Research. Here are five key takeaways from the survey and tips on how you can use this information to get a leg up on the competition.
- Home buyers are optimistic and competitive in getting the home of their dreams
According to the survey results, more than one-third of home buyers expect “a lot of competition this spring” and are prepared to adjust their bidding strategies to get their dream home. Housing inventory is low this year, which means there are fewer homes for buyers to choose from.
Serious buyers need to be aware of the high-level of competition they are going to face, especially in areas like Silicon Valley, Seattle, and Salt Lake City, where competition is expected to be even more fierce.
Buyers will need to be more than just prepared for stiff competition, they need to be prepared to put their money where their mouths are. According to the survey results, 40 percent plan to put more than the traditional 20 percent down in order to create a more attractive offer.
According to our Chief Economist, Danielle Hale, buyers should get pre-approved for a mortgage before starting the search. This will allow you to move fast. Do your research and plan ahead for different interest rate scenarios.
On April 19, rates stood at their highest level since early 2014, and we expect them to continue to rise throughout the year. Having your finances in order can help you stay nimble in a fast-moving market.
Know your price point and set alerts on realtor.com®, so you’re notified immediately when a home hits the market. It can give you the information you need faster, so you can make a move.
You can even set alerts on a particular home you’re interested in, so you know right away if anything changes! Most of our listings are updated at least every 15 minutes, so you have the most up-to-date information.
- Rents on the rise makes home ownership appealing
According to survey results, 23 percent of buyers between 18 and 34 years old reported rising rent as a trigger for their desire to purchase a home – more than any other option on the survey.
Steep rental prices continue to be a trend in many cities, especially in trendy urban areas that have been popular with millennials. The Department of Housing and Urban Development show that rents were up in 85 of the top 100 metro areas, including nine metros where rents increased double-digit percents in the last year.
“We know rents have been going up pretty consistently the past few years. In the last 13 months rents have increased 4 percent nationwide. That’s not huge but relentless increases year after year add up,” Danielle Hale told Forbes. “If buyers can lock in a monthly mortgage with a 30-year fixed (rate) there is a huge incentive to get into the home buying market.”
If you’re considering buying a home due to rising rent costs but you’re not sure what the numbers really look like, check out our Rent Vs. Buy calculator. This is a good tool when trying to decide whether taking the leap into homeownership is worth it, financially.
- Millennial buyers are impacted most when it comes to interest rates and price hikes
Although life events are prompting many millennials to consider homeownership, debt and smaller down payments are likely going to leave them vulnerable to an already challenging market.
Of those between the ages of 18 and 34 years old in the millennial generation, the impact of debt changes the landscape. 78 percent of these respondents have credit card debt, 68 percent have a car loan, 62 percent have a personal loan, 62 percent have mortgage debt, 57 percent have home equity loans, and 61 percent have student loans.
“Existing debt and lower down payments leave younger shoppers more exposed than others to the impact of rising mortgage rates and record-high home prices,” said Danielle Hale. “These obstacles won’t prevent millennials from finding and buying homes, but most will have to adapt to these challenging market conditions by adjusting their home search.”
According to the survey, 79 percent of respondents said rising interest rates will affect their home search, causing many to look for a smaller or less expensive home, and some even expressed that they would search in different neighborhoods.
- Majority of buyers want space, multiple bathrooms, and a garage
What you want in a home is often influenced by what stage of life you are in. However, our survey found many commonalities when it comes to home features among buyers of all ages.
In fact, 44 percent of all respondents said they are looking for a three-bedroom home and 93 percent of respondents want at least two bathrooms. Additionally, 27 percent of all buyers rate a garage as an important home feature, ahead of an updated kitchen, 24 percent, and open floor plan, 20 percent.
Realtor.com® has so many helpful features that will help you narrow down the search, honing on the things that are the most important to you. Need a two car garage instead of one? You can search for that.
You can even search by important neighborhood amenities like coffee shops, grocery stores, restaurants, and more.
We also know being close to a good school is important for many buyers. Our school search feature allows you to enter the name of the school you want to live close to in the search bar, and results will show you homes in that school district.
- Millennials are snatching up contemporary and colonial homes, while older buyers prefer ranches
One thing that did stand out as a difference between millennial buyers and other age groups was the style of home they preferred compared to other buyers. Among millennials who expressed a home-style preference – 11 percent didn’t – contemporary and colonial homes took the top spots, each favored by 10 percent of respondents.
On the other hand, ranches are the most popular home style for buyers 55 and older, favored by 28 percent, followed distantly by contemporary homes at 12 percent. Only 6 percent of millennials favor ranch homes.
There are so many different styles to choose from and even styles you may not have known even existed. Cape Cod, Mediterranean, Eichler, colonial, contemporary, craftsman and so many more – how do you know which style is right for you?
According to our experts, your Zodiac sign can help you decide which home style is best for you. Not sure what any of these styles even look like? Check out this helpful guide.
There are so many factors that go into your home-buying decision, but knowing what others are focusing on this season could help you get ahead of the competition.
And as always, realtor.com® is your go-to destination for tips and resources all the way from search to close. For more information on the current market, stay tuned to our research portal that will give you the latest, up-to-date real estate market insights.
Also, check out our News & Insights page for helpful news and information on all things home.
Cody Horvat is a communications specialist at realtor.com® and contributor to the Home Made blog.