Looking for Space and Willing to Pay for it -- Realtor.com® Survey Shows Shifting Priorities for First-Time Homebuyers
These buyers are increasingly willing to up their budget and pay over asking price to land a home in this competitive market
SANTA CLARA, Calif., Dec. 16, 2021 /PRNewswire/ -- Millennials are settling down, starting families and looking for more space -- and they know that it won't come cheap. A new Realtor.com® survey suggests shifting priorities among first-time homebuyers who are increasingly looking for flex space such as finished basements, guest rooms and guest houses. These home shoppers have also increased their budgets since the spring, and are more willing to bid over asking price and use other tactics to get ahead of the competition.
Realtor.com® and HarrisX surveyed first-time homebuyers in spring 2021 and again in fall 2021 to understand how their priorities have shifted in a competitive housing market. The survey found that while more than a quarter of hopeful first-time homebuyers were unsuccessful at purchasing a home in 2021, 72% are aiming to buy in 2022. And after months of trying, home shoppers have a better understanding of what it will take to write a winning offer.
"Despite a challenging year, aspiring first-time homebuyers are surprisingly optimistic about 2022," said George Ratiu, manager of economic research, Realtor.com. "They're looking at the new year as a fresh opportunity to make their dreams of owning a home come true and our survey suggests that they're armed with information and ready to compete for their first home."
First-time homebuyers know what it takes to win
Home sales are expected to hit their highest level in 16 years in 2022 according to the Realtor.com® 2022 Housing Market Forecast. In this fast-paced, competitive market there are a number of tactics that buyers can use to get ahead such as checking online listings every day, putting more than 20% down and making an offer quickly.
- In the spring, 79% of first-time homebuyers were planning to use these tactics to win a home, but that number jumped to 91% in the fall, indicating that buyers know what it takes to win.
- First-time homebuyers have also become more willing to offer over asking price. In the spring 39% said they would not pay over asking, but that number fell to 24% in the fall.
- In the fall, three percent of first-time buyers were willing to offer 30% over asking (in the spring, no respondents selected this option), which equates to more than $110,000 on a typical home -- a significant premium.
Expanding budgets to match the market
With the median home price in the U.S. hitting $380,000, many first-time homebuyers found that they needed to up their budget to land a home.
- In the spring, 75% of first-time shoppers were looking for a home at or below $350,000, but that number fell to 62% by the fall, as budgets increased.
- While those shopping in the $350,000 - $500,000 range held relatively steady, the number of first-time shoppers in the $500,000 - $750,000 range doubled, jumping from 6% in the spring to 13% in the fall.
Staying closer to home
During the pandemic, many people moved from cities to suburbs to find more space and affordability. As we head into 2022, survey respondents are planning to stay closer to their current location.
- First-time homebuyers planning to stay in their current city or town increased from 40% in the spring to 47% in the fall.
- Those planning to move to a different city or town within their state decreased from 42% in the spring to 36% in the fall.
- Those planning to move to a different state held relatively steady at 17% in the spring and 16% in the fall.
"Our survey data suggests that many people have found the location they'd like to settle down in, and are now focused on landing the right home. And with more homes expected to hit the market in the coming months, there should be plenty of opportunity for prepared buyers to find their dream home," said Ratiu.
Methodology:
The survey was conducted online from Sept. 23 - Oct. 1, 2021 among 2,583 adults by HarrisX (which includes an oversample achieving 502 respondents buying a house for the first time in the next year). The sampling margin of error of this poll is +/- 1.9 percentage points for all respondents, and 4.4 percentage points for first-time homebuyers. The results reflect a nationally representative sample of U.S. adults. Results were weighted for age by gender, region, race/ethnicity, income, and the status of those first-time homebuyers where necessary to align them with their actual proportions in the population.
What price range are you looking for in a home purchase? |
Spring 2021 |
Fall 2021 |
Less than $100,000 |
26% |
16% |
$100,000-$200,000 |
25% |
21% |
$200,001-350,0000 |
23% |
24% |
$350,001-$500,000 |
12% |
11% |
$500,001-$750,000 |
6% |
13% |
$750,001-$1,000,000 |
2% |
6% |
$1,000,001-$1,500,000 |
1% |
3% |
$1,500,001-$2,000,000 |
2% |
3% |
Over $2,000,000 |
2% |
2% |
How much over the asking price are you willing to pay to get a home that meets your needs? |
Spring 2021 |
Fall 2021 |
I'm not going to pay more than the asking price |
39% |
24% |
1-5% over listing price |
32% |
18% |
6-10% over listing price |
17% |
19% |
11-15% over listing price |
7% |
9% |
16-20% over listing price |
4% |
12% |
21-25% over listing price |
1% |
9% |
26-30% over listing price |
1% |
6% |
30%+ over listing price |
0% |
3% |
What are you doing or planning to do to get ahead of the competition? |
Spring 2021 |
Fall 2021 |
Check listings websites every day |
40% |
34% |
Make an offer within 48 hours of seeing a home |
n/a |
22% |
Set a price alert to get notified as homes hit the market |
24% |
20% |
Put more than 20% cash down payment |
22% |
25% |
Put down a larger earnest money deposit |
18% |
19% |
Offer all cash |
13% |
16% |
Offer above asking price |
13% |
19% |
Have my agent write letters to homeowners in neighborhoods I'm interested in |
11% |
14% |
Ask for no money for repairs after inspection |
12% |
13% |
Go over my budget |
n/a |
22% |
Forgo contingencies like inspections and appraisals to make the deal |
9% |
7% |
Compete in a bidding war |
n/a |
8% |
Make an offer on a home sight unseen |
n/a |
13% |
I don't plan to use any tactics to get ahead of other buyers |
21% |
9% |
Where do you plan to relocate? |
Spring 2021 |
Fall 2021 |
Within my current city/town |
40% |
47% |
To a different city/town within the same state |
42% |
36% |
To a different state |
17% |
16% |
Outside of the U.S. |
1% |
1% |
Of the following, which features in a home are most important to you? |
Spring 2021 |
Fall 2021 |
Garage |
40% |
30% |
Updated kitchen |
37% |
30% |
Large backyard |
32% |
35% |
Quiet location |
35% |
26% |
Updated bathrooms |
26% |
22% |
Outdoor living area |
17% |
13% |
Open floor plan |
21% |
18% |
Space for pets |
24% |
18% |
Finished basement |
15% |
20% |
Guest room |
9% |
20% |
Not in flood zone |
17% |
14% |
Home office |
13% |
10% |
Large square footage |
14% |
15% |
Newly built |
8% |
11% |
Broadband internet availability |
18% |
12% |
Pool/spa |
7% |
12% |
Completely renovated |
10% |
10% |
Good public-school district |
17% |
16% |
Solar panels |
6% |
10% |
Walkability to neighborhood amenities |
15% |
12% |
Close proximity to family/friends |
11% |
9% |
Person/Man cave |
7% |
9% |
Not in fire-hazard zones |
7% |
10% |
Guest house |
4% |
7% |
Proximity to greenspace (parks, hiking trails, etc.) |
8% |
6% |
Short commute time |
12% |
8% |
Mother-in-law suite |
4% |
4% |
Small square footage |
2% |
2% |
Small backyard |
10% |
7% |
Other (specify) |
3% |
0% |
About Realtor.com®
Realtor.com® makes buying, selling, renting and living in homes easier and more rewarding for everyone. Realtor.com® pioneered the world of digital real estate more than 25 years ago, and today through its website and mobile apps offers a marketplace where people can learn about their options, trust in the transparency of information provided to them, and get services and resources that are personalized to their needs. Using proprietary data science and machine learning technology, Realtor.com® pairs buyers and sellers with local agents in their market, helping take the guesswork out of buying and selling a home. For professionals, Realtor.com® is a trusted provider of consumer connections and branding solutions that help them succeed in today's on-demand world. Realtor.com® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. For more information, visit Realtor.com®.
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