Realtor.com senior economist Ralph McLaughlin says homebuyers and sellers have ‘more time’ than they think to get a good deal.
One in every five potential U.S. homebuyers are willing to sacrifice their safety in order to afford a home over the coming year, according to a recent Redfin report.
That figure is even higher for younger house hunters. According to the real estate firm’s latest data, 23.7% Gen Z respondents said they are willing to compromise their physical safety to afford a home. Just over 18% of millennials and 17.5% of Gen Xers are also willing to do the same but only 5.5% of Baby Boomers said they’d risk their safety for cost.
That’s according to the Redfin-commissioned survey of roughly 3,000 U.S. homeowners and renters conducted by Qualtrics in February.
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The issue is that younger generations are faced with a housing supply crunch where prices are sitting at all-time highs, Redfin Senior Economist Elijah de la Campa said.
A shot of homes in Missouri. (Tammy Ljungblad/The Kansas City Star/Tribune News Service via Getty Images / Getty Images)
“Couple that with them earning less—relative to older generations—and you can see why they are willing to make more serious sacrifices to find a home they can afford,” de la Campa said, adding that “when the typical household earns less than is needed to buy or rent a typical home, house hunters can’t afford not to make sacrifices.”
The cost to both rent and buy a home has surged in recent years, though the rental market hasn’t been as brutal.
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Years of underbuilding fueled a shortage of homes in the country, a problem that was later exacerbated by the rapid rise in mortgage rates and expensive construction materials.
Construction at the Toll Brothers Borello Ranch Estates housing community in Morgan Hill, California, US, on Tuesday, June 4, 2024. (Getty / Getty Images)
Higher mortgage rates over the past three years have also created a “golden handcuff” effect in the housing market. Sellers who locked in a record-low mortgage rate of 3% or less during the pandemic began have been reluctant to sell, limiting supply further and leaving few options for eager would-be buyers.
Last week, Redfin reported that asking rents were 23% above June 2019 levels while mortgage payments were 90% above pre-pandemic levels.
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Although homebuying costs eased slightly in July, it wasn’t enough to bring buyers back from the sidelines, according to the real estate firm.
A Coldwell Banker LLC sign is displayed outside of a house for sale in Las Vegas, Nevada, U.S., on Tuesday, Nov. 27, 2012. (Photographer: Jacob Kepler/Bloomberg via Getty Images / Getty Images)
“The country’s leaders should heed this lesson when considering how to improve affordability in the homebuying market: When there’s more housing to go around, prices don’t increase as fast,” Redfin Senior Economist Sheharyar Bokhari said.
FOX Business’ Megan Henney contributed to this report