NAR: Buyer demand is stronger than it appears as 15%-27% of buyers (by ethnic group) wait for lower home prices and 18%-25% wait for lower mortgage rates.
WASHINGTON – The current real estate market’s high home prices and mortgage rates, as well as limited inventory, are the top reasons that Realtors® and prospective homebuyers across races and ethnicities cite as barriers to purchasing a home, according to two new reports from the National Association of Realtors® (NAR).
In partnership with Morning Consult, NAR’s 2023 Experiences & Barriers of Prospective Home Buyers Across Races/Ethnicities report surveyed white, Hispanic/Latino(a), Black and Asian prospective homebuyers about their experiences.
NAR’s 2023 Experiences & Barriers of Prospective Home Buyers: Member Study surveyed residential Realtors about their latest buyer and compares findings with the consumer study.
“Homebuyers face the most difficult affordability conditions in nearly 40 years due to limited inventory and rising mortgage interest rates,” says Jessica Lautz, NAR’s deputy chief economist and vice president of research. “The impact is exacerbated among first-time buyers who are more likely to be from underrepresented segments of the population.”
Among prospective home buyers, Asian (27%), Hispanic (24%), Black (20%) and white (15%) respondents say the main reason they have not yet bought a home is because they are waiting for prices to drop. Prospect homebuyers also cite other reasons, including: waiting for mortgage rates to decline (18%-25% of all four groups) and not enough available homes within their budget (19%-24% of all four groups).
Realtors agree. They cite the same top three reasons: not enough homes available for purchase in buyers’ budgets (34%), buyers waiting for mortgage rates to drop (18%) and buyers waiting for prices to drop (9%).
Buyers also report a challenge saving for a down payment, or at least enough to be competitive with other buyers. That was cited by 6%-9% of the groups. When asked about the reasons, they noted current rent/mortgage payments (43%-56%) and credit card payments (38%-57%).
There is help for down payment problems, but many buyers weren’t aware of them. Only 8%-15% of all four groups applied to a down payment program; 20%-33% considered one but did not apply; 21%-32% did not consider the programs at all; and one-third (30%-33%) didn’t know any programs existed. Those who knew about them but still didn’t apply said they didn’t know enough about them.
Realtors understand buyer’s down payment challenges: 53% say at least one issue held their latest buyer back from saving a competitive down payment, most likely current rent or mortgage payments (23%) or credit card balances (17%).
Only 1 in 4 Realtors (23%) say that their buyers struggling to come up with a down payment have applied for down payment assistance programs, notably because their income is too high (30%), they did not know enough about the programs (19%), or they worried about the competitiveness of their offers in multiple-bid situations (17%).
“Down payment assistance programs often fly under the radar for potential homebuyers,” says Lautz. “Using programs – like FHA, VA or USDA loans – can make homeownership more attainable. Experts … can educate potential buyers about these programs. Doing so will bring in more first-time buyers and narrow the racial homeownership gap.”
Discrimination in homebuying
Discrimination also plays a role in the homebuying process. About one in six (13%-16%) prospective homebuyers across races and ethnicities reported discrimination – more than half of Black (63%), Asian (60%) and Hispanic (52%) buyers who reported it say it was due to their race or ethnicity.
In general, the top form of discrimination reported was steering toward or away from specific neighborhoods (36%-51% of all four groups) followed by more strict requirements (32%-48%).
Despite this, most homebuying discrimination goes unreported: 47%-81% who describe it did not report it to a government agency or legal aid organization.
Realtors surveyed broke ranks with buyers a bit on this question. Only 1% of Realtors who took the survey said that their buyers experienced discrimination during the homebuying process, with 13% not sure.
Of the few Realtors who did report discrimination based on race or ethnicity, most cited their mortgage lenders in the type of loan product offered (43%) or that buyers did not receive a call back from lender(s) (29%).
Of those Realtors who report discrimination, 57% was based on race, 29% based on age and 21% based on familial status (including marriage or parental status). Just 7% say that a buyer reported the discrimination to a government agency or legal aid organization.
© 2023 Florida Realtors®
©Florida Realtors®
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