Prospective homebuyers’ patience may be waning, with fewer willing to wait until home prices or interest rates come down to purchase a home, according to new data from the Bank of America Homebuyer Insights Report.

Today, 62% are willing to wait for prices and/or rates to fall before buying a home, down from 85% just six months ago. And they seem to be taking action: Sales of new single-family houses in September 2023 were a seasonally adjusted 759,000 – up from 679,00 sales in April 2023.1

“When it comes down to it if buying a home is your goal and within your budget, the best time to buy is when you’re ready financially and you can find a home that fits your needs,” said Matt Vernon, head of consumer lending at Bank of America in a news release. “Even in the current interest rate environment, there are clear benefits to purchasing a home and beginning to build equity.”

This latest research also explores what buyers would be willing to forgo to buy sooner, and what would motivate current homeowners to sell.

Approximately 80% of outstanding U.S. mortgages have an interest rate below 5%.2 This gives homeowners an incentive to stay put because the average 30-year fixed mortgage rate hit 8% in October of this year.3 Younger people, Millennials in particular, are being hurt disproportionally by this trend, according to Bank of America Institute’s newly released Housing Morsel. The rate disparity is compressing the already limited supply of houses for sale, and begs the question: What does inspire homeowners to sell and free up inventory for would-be homebuyers in today’s environment?

What Would Make Homeowners Sell?

Half of current homeowners say they’d be prompted to sell if their dream home became available (50%) and/or if they found a more affordable area (54%) – even if it meant paying a higher interest rate for a new mortgage. Additional motivations for some, but not as many, to move and give up their current mortgage rate include:

  • Job opportunity or job relocation – 40%
  • Nicer neighborhood amenities – 40%
  • The need for a larger home or more rooms – 38%
  • A social community to be a part of – 32%
  • A desire to be adventurous and move to a new area – 28%
  • Moving to a home with rental potential – 21%

Millions of people are moving to areas, including the Sun Belt (PDF), where they can afford to buy a home. Those surveyed say the following could or already has motivated them to move from one state to another:

  • Cost of living – 60%
  • Career/job reasons – 44%
  • Family and relationships – 37%
  • Affordability of housing– 33%
  • Safety concerns – 27%
  • Retirement – 25%
  • Adventure and exploration – 20%

Work-related reasons may also inspire homeowners to sell in this market, and work is a major driver of out-of-state moves. Those who have or would move to a new state for their careers are driven by increased job opportunities (57%), job requirements to relocate (29%), or the fact that they can work remotely and are no longer tied to an office (28%).

Overall, regional labor market dynamics and migration trends are closely correlated, according to Bank of America Institute. Internal Bank of America data found that of the 26 Metropolitan Statistical Areas (MSAs) tracked, Boston and Portland, OR, are more likely to see inward migration due to job changes and cities such as AustinSan AntonioLas Vegas, and Tampa saw the biggest population inflow during the third quarter. What is more, relocating workers seem to be getting bigger pay increases than those who stayed in the same MSA.

Willing to Sacrifice

With inventory scarce, the Homebuyer Insights Report also explored how prospective buyers are adapting. The report found those surveyed would give up specific home features to increase their chances of finding a home in the year ahead. Notably, there are some differences in what older and younger generations are willing to sacrifice to buy a home.

Gen Z (15%) are less likely to give up space than baby boomers (40%). However, Gen Z (24%) would sooner compromise on location, including proximity to work, schools, and amenities than baby boomers (6%).

Across all generations, would-be buyers are most likely to give up the following if it increases the chances of finding a home to purchase:

  • A brand-new home – 35%
  • Being near family – 33%
  • Public transportation access – 32%
  • Historical charm – 31%

Homeownership Lays the Foundation for Financial Success

This survey asked participants if they viewed homeownership as a top indicator of success. Here’s how homeownership stacked up against other key markers of success in life:

  • Being healthy physically and mentally – 71%
  • Personal growth and development – 65%
  • Having strong relationships and connections with friends and family – 63%
  • Having a good work-life balance – 58%
  • Homeownership – 48%
  • Career fulfillment – 46%
  • Building a family – 46%
  • Reaching a certain amount of money in savings/investments – 43%
  • Contributing/supporting causes that are important to a person – 35%

However, homeownership tops the list of how respondents define financial success (53%), according to those surveyed. Also important: saving enough money for an emergency fund (50%), paying down debt (45%), and being able to retire early (43%).

Nearly two-thirds (63%) of these homeowners said owning a home is one of their greatest personal achievements – more than raising a family (50%), being in a committed relationship (32%), and/or overcoming a significant challenge (25%).

Respondents continue to see homeownership as a reflection of significant achievement and a driver of wealth creation that can help them build equity over time:

  • 91% of respondents say they perceive their home more as a valuable investment than as a financial liability.
  • 89% of respondents say they think about the financial security, rather than the financial risk, of owning a home.
  • 90% of respondents say home is a place to make memories and share experiences rather than just a place to live.
  • 81% of respondents say they think of owning a home as liberating rather than confining.

“There’s a clear desire for homeownership, but for some, it has become more challenging to achieve due to current market realities,” Vernon said. “That’s why we are committed to offering affordable homeownership solutions, which include grants to help homebuyers with their down payments and closing costs, with no repayment required.”

Community Homeownership Commitment
Bank of America’s $15 billion Community Homeownership Commitment aims to help low- and moderate-income homebuyers across the country begin to build their personal wealth and family legacy through the power of homeownership. The program includes a combination of specially designed products, resources, and expertise as well as one of the most generous grant programs in the industry. Bank of America offers up to $17,500 in combined down payment and closing costs grants and has already granted nearly $438 million in those grants as of the third quarter of 2023, with 88% of those grants going to first-time homebuyers.

About Bank of America’s Homebuyer Insights Report
Sparks Research conducted a national online survey on behalf of Bank of America between September 25th and September 28th, 2023.  A total of 1,000 surveys (500 homeowners / 500 renters) were completed by adults 18 years old or older, who make or share in household financial decisions, and who currently own a home/previously owned a home or plan to own a home in the future.  Survey completions were monitored by gender and age and/or proper balancing. The margin of error for the total national quota of 1,000 surveys is +/- 3.1% at the 95% confidence level.  The margin of error for homeowner and renter quotas of 500 surveys is +/- 4.4% at the 95% confidence level.  Select questions allowed respondents to choose more than one answer, resulting in responses that may equate to more than 100 percent.

Source: Bank of America Corp.