Frustrated would-be home buyers may be spending money that would have gone toward a house on current home renovations, vacations or on 529 college savings accounts.
NEW YORK – Potential home buyers are deferring their first house hunts not just for a few months, but for years and finding other ways to use the money they had been saving.
Some are putting money that would have gone into a home into their relatives’ futures.
ISS Market Intelligence reports there was a 15% increase in the number of new 529 college savings accounts opened in the third quarter from a year ago.
Others are spending on extensive renovations and decorations for their current spaces.
Homeowners spent $489 billion on improvements and repairs over the 12 months ending in September, according to Harvard University’s Joint Center for Housing Studies, a 5.4% increase over the previous period on top of a 17% gain the year before.
Some consumers are splurging on vacations, as consumers have fueled a spate of increased spending in the United States.
“People are taking their frustrations out by using that money on vacations and enjoying life,” says Jamie Battmer, the chief investment officer at wealth-management firm Creative Planning.
Unlike the equity they could build through a mortgage, “that money is gone and it’s never coming back,” Battmer says.
Katie Burke, a consumer behavior researcher at Accenture, asserts the unaffordability of the housing market is leading people to readjust their definitions of success.
“We used to be able to work for a few years, save for a home and get our independence,” Burke says. “That mental model is shifting.”
Source: Wall Street Journal (11/10/23) Wolfe, Rachel
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