There is one cost that buyers are placing significant weight on
Nearly half of prospective homebuyers in the US are grappling with basic home-related costs, including home insurance, which is becoming a critical factor in where people decide to settle.
Of the 1,818 adults surveyed, 48% said they face challenges covering expenses like maintenance, utilities, and property taxes, according to a recent survey from Mphasis Digital Risk. Rising home insurance costs, driven by extreme weather, are making it even harder.
Insurance affordability is now a key concern for many. According to the survey, 47% of respondents said home insurance prices will greatly impact their decision on where to move. In fact, 25% of respondents are actively considering relocation due to severe weather events in their area, and 26% know someone who has had to move because insurance costs have become too high.
Despite ongoing financial challenges, respondents remain cautiously optimistic about the housing market. The survey revealed that 64% of potential buyers are somewhat or very hopeful that mortgage rates will fall further soon.
For many, the tipping point for buying would be a mortgage rate of around 5%—a rate 42% of those surveyed said would convince them to make a purchase. Another 27% said they would buy at 4%, while 20% would consider buying at 6%.
“Many prospective buyers started questioning the American dream of homeownership as inflation brought mortgage rates to a cyclical peak of 8% in October 2023, but now rates are down more than 1.5% from this peak,” Mphasis managing director Jeff Taylor said in the report.
However, 40% of respondents said they plan to delay any home purchases until after the upcoming presidential election. The reason for hesitancy? Inflation, with 30% of participants citing it as the primary driver of high mortgage rates. Others placed the blame on political leadership or the Federal Reserve’s policies.
With home supply remaining tight, many buyers have faced a difficult market. More than 20% of those surveyed have been house hunting for over two years, with some describing the search as “frustrating” or “depressing”.
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Yet, with the expectation of lower rates in the future, Taylor remains optimistic about a potential rebound in the housing market.
“We’re now getting closer to homebuyers’ comfort zone of low-6%, high-5% rates, and September’s anticipated Fed cuts should help buyer sentiment,” he said. “This is why industry estimates call for a robust 2025 with $2 trillion in expected mortgage originations.”
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