Home purchases show little sign of slowing during this Spring homebuying season, characterized by surging demand and low inventory. Homes are being snapped up quickly, with two-thirds (65%) of prospective homebuyers saying they would make an offer within three days of viewing a home, and 20% saying they would make an offer immediately. This is according to the annual Bank of America’s 2022 Homebuyer Insights Report, which explores how homebuyers are navigating an ever-changing homebuying market.
Homes spent an average of 25 days on the market in February 2022, less than half as long as two years ago (56 days), despite the fact that more than half (56%) of prospective homebuyers surveyed report being hesitant to purchase due to high home prices, which are expected to increase 10% by the end of 2022.
To put themselves in a better financial position to purchase a home, many buyers are getting creative in the ways they’re saving. Whether turning a passion into moonlighting or taking on freelance work, Bank of America found that the majority of homebuyers (56%) are willing to consider a second job to earn supplemental income for a home purchase. For instance, approximately one-third of prospective homebuyers would consider starting an online store to sell handcrafted pieces (34%) or selling some of their belongings (31%) to save for a home.
“Whether your next step is to build your savings or apply for a mortgage preapproval – the more informed you are about the market and purchasing process, the more able you’ll be to put your best foot forward when pursuing a home,” says Matt Vernon, head of retail lending for Bank of America. “There’s no denying the challenges of today’s homebuying market. We’re helping many consumers make informed financial decisions on their path toward homeownership.
A home is one of the most expensive purchases most people will make in their lifetimes, and it requires careful planning. Today, more than half (53%) of prospective homebuyers intend to buy a home according to their original timeline (41%) or sooner than they originally intended (12%).
To make their dreams of homeownership a reality, prospective homebuyers are willing to compromise to reach this goal, such as:
- Moving to an up-and-coming neighborhood (82%)
- Buying a home further from entertainment, restaurants, and shopping (79%)
- Buying a smaller home (71%)
- Forgoing outdoor space (70%)
However, there are limits to what prospective homebuyers will sacrifice to purchase a home. Fewer than half of prospective homebuyers (46%) would sacrifice privacy; more than one-third would rather spend money on clothing or accessories (35%) and travel (34%) than save more for a home; and 26% would rather save less for a home than give up their self-care routines, such as trips to the salon or getting a massage.
As they surpass baby boomers as the nation’s largest adult generation, millennials are a driving force behind today’s competitive homebuying market. This group now represents the largest cohort buying homes and faces unique motivations and pressures. One-third (34%) say they feel the pressures of adulthood, meaning they feel like they should be buying a home at their age. Over half (53%) are motivated by the desire to set down roots for their growing family, and 43% want to start building home equity.
This generation is navigating homebuying on their own terms. Less than one-third (29%) would seek financial help from their family to buy their home. However, millennials would consider:
- Delaying their home purchase timeline to save more money (51%)
- Increasing their initial budget (46%)
- Sacrificing their preferred location in favor of finding the perfect home (43%)
- Building their own home (36%)