TD Bank survey reveals shifting homeownership trends amid rising costs
Homeownership is becoming increasingly expensive, but younger generations entering the housing market are finding new strategies to cope with low down payment options, a new TD Bank survey has revealed.
As homeownership costs continue to rise, seven in 10 homeowners reported difficulties in saving or budgeting effectively. The survey highlighted the financial pressures facing homeowners amid increasing utility bills, home insurance, property taxes, and repair costs.
Many prospective homeowners have adjusted their expectations due to lower inventory levels in several markets. Nearly three-quarters (73%) of those planning to stay in their current homes for less than three years have increased their initial housing budgets.
The primary reasons for these adjustments include high home prices (45%), elevated interest rates (31%), and a lack of options within their price range (31%).
These rising costs are not only affecting housing budgets but are also reshaping how homeowners manage their finances. Homeowners reported experiencing cost increases in utilities (83%), home insurance (81%), property taxes (81%), and repairs (74%).
Seventy per cent (70%) of homeowners indicated that the cost of homeownership has impacted their ability to save or budget effectively. The financial strain has broader implications, affecting homeowners’ ability to contribute to savings accounts (33%), 401(k)s (16%), and budgets for discretionary spending such as entertainment (33%) and travel (33%).
Additionally, more than one in five (22%) stated that homeownership costs have hindered their ability to invest. One-third of homeowners (32%) have reduced or stopped contributing to retirement savings to save for a down payment or manage their home budget.
This trend is particularly prevalent among younger homeowners, with 59% of Gen Z homeowners and 38% of Millennials lowering or stopping their retirement account contributions.
Despite these challenges, many homeowners remain optimistic about the housing market. According to TD Bank, 67% of homeowners feel that purchasing a home is still attainable, and 38% say they’re likely to buy a home within the next year.
“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,” Steve Kaminski, head of US residential lending at TD Bank, said in the report.
About 80% of Gen Z respondents put down less than 20% for a down payment – a positive trend, according to Kaminski.
“It’s encouraging so many homeowners understand that 20% down is not the only option, with many lenders offering low-down payment products and down payment assistance programs,” he said. “As younger generations grapple with historically high home values coupled with larger financial responsibilities and a higher cost-of-living, it’s important to make every dollar count.”
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Interest rates remain a significant factor, with 42% of Gen Z reporting interest rates of 5.00% or higher, followed by Millennials (35%), Gen X (30%), and Baby Boomers (30%). More than half of homeowners (54%) did not use a rate buydown when purchasing their homes, although 42% of those who did found it helped lower their housing costs.
The findings are based on a survey conducted by Big Village Insights among 1,806 homeowners who purchased a home within the past 10 years and acquired a mortgage. The survey was conducted from May 28 to June 9.
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