As homeownership costs continue to increase,
seven in ten homeowners say it has impacted their ability to save
or budget
The majority of homeowners (67%) feel that purchasing a home is
still attainable and 38% say they’re likely to purchase a home in
the next year, according to a recent TD Bank survey, showing
positive views in the housing market amid rising prices and current
interest rates.
TD Bank's 2024 Mortgage Service Index surveyed more than 1,800
homeowners across the country to gather insights and analyze
perceptions around the homebuying and mortgage experience, as well
as attitudes around the housing market.
The survey also found that optimism is reflected even more so
among younger generations, as 84% of Gen Z and 68% of Millennials
say purchasing a home still feels attainable despite the rising
cost of homeownership. Optimism wavered just slightly among Gen
Xers with 66% feeling that purchasing a home was attainable,
followed by 59% of Baby Boomers. As U.S. existing home sales
reached a nearly 20-year low in 2023, these sentiments highlight a
sense of hope among home buyers.
“Although many of the challenges impacting homeownership are
leaving some homeowners weary about the market, it's great to see
borrowers, especially younger generations, remaining steadfast in
navigating the market to find a home that works for them and their
budgets,” said Steve Kaminski, Head of U.S. Residential Lending for
TD Bank. “Owning a home is still an important wealth vehicle for
any generation and it's reassuring that homeowners continue to see
the value in this type of investment."
Increasing costs are taking a toll on homeowners’ personal
finances
As a result of lower inventory levels in several markets, many
of those searching for a home have re-evaluated their budget and
savings expectations. Among respondents who plan to stay in their
current home for less than three years, nearly three-quarters (73%)
increased their initial housing budgets, underscoring mismatched
expectations in the cost of homeownership. Primary reasons for the
increase included: significantly rising home prices in their
desired area (45%), high interest rates (31%) and a lack of options
within their price range (31%).
The increasing costs of homeownership are not only impacting
housing budgets – they are also reshaping how homeowners manage
their finances and make long-term financial plans. Homeowners
reported experiencing cost increases in utilities (83%), home
insurance (81%), property taxes (81%) and repairs (74%). These
rising expenses are putting pressure on personal finances, as 70%
of homeowners indicate that the cost of homeownership has impacted
their ability to save or budget effectively.
The financial strain has broader implications as well, including
impacting homeowners’ ability to contribute to their savings
accounts (33%) or 401(k)s (16%), as well as budget for “fun” (33%),
travel (33%) or monthly expenses (27%). More than one in five (22%)
also said the cost of homeownership has impacted their ability to
invest. And one-third of homeowners (32%) have reduced or stopped
contributing to retirement savings to save for a down payment or
home budget. This trend is particularly prevalent among younger
homeowners; three in five Gen Z homeowners (59%) have lowered or
stopped their 401(k), IRA or other retirement account
contributions, followed by 38% of Millennials as they save for a
down payment or home budget.
If you can’t find it, fix it
Rather than purchasing new homes, many homeowners are focusing
on enhancing their current living spaces, with 25% of homeowners
planning to stay in their current homes forever. Additionally, most
homeowners (73%) plan to embark on home renovations in the future,
with 28% planning to start within the next year. Over seven in ten
(72%) indicate they are currently looking for more space in their
home, and 39% would consider building an addition onto their
existing home rather than moving for more space, given current
interest rates.
Let’s get down (payment) to it
Eighty percent of Gen Z respondents put down less than 20% for a
down payment, compared to 77% of Millennials, 60% of Gen X and 44%
of Baby Boomers.
“It's encouraging so many homeowners understand that 20% down is
not the only option, with many lenders offering low-down payment
products and down payment assistance programs," said Kaminski. "As
younger generations grapple with historically high home values
coupled with larger financial responsibilities and a higher cost of
living, it's important to make every dollar count. Speaking with a
mortgage professional early on may not only help save money on a
down payment but may also help buyers better prioritize and plan
for other financial goals."
As rates remain higher for longer, with the Federal Reserve
considering cuts later this year, the survey found that 42% of Gen
Z said they had interest rates of 5.00% or higher, followed by
Millennials (35%), Gen X (30%) and Baby Boomers (30%).
More than half of homeowners (54%) did not report using a rate
buydown when purchasing their homes. However, 42% of homeowners
found using a rate buydown helped lower their housing costs,
demonstrating that buyers are looking for ways to make
homeownership more affordable.
Buying a home is more stressful than ever, but experienced
advice helps
Seven in ten homeowners (71%) found buying their most recent
home stressful, an uptick from 64% of respondents in 2023. What’s
more, 82% of Gen Z said they felt stressed, compared to 60% of Baby
Boomers who may already have a roadmap of the homebuying
process.
Education can play a role in making homebuyers feel more
confident in their options throughout the process. Two in five
homeowners (43%) felt they required the most education and guidance
during the mortgage process, with nearly one-quarter (24%)
indicating that identifying a loan option was when they felt they
needed the most education and guidance. While 83% felt they had
enough resources to educate themselves, 39% were still unfamiliar
with mortgage affordability/loan programs, highlighting a gap in
knowledge of the homebuying journey.
Over half of the respondents (57%) contacted realtors for
information, education or opinions on the products or services
offered by each bank or lender they considered. Other top sources
included family and friends (37%), bank/lender websites (36%) and
in-person meetings at branches or lender offices (34%), showing
that homeowners prefer learning about their options from industry
professionals and loved ones.
Survey Methodology
This report presents the findings of a CARAVAN® survey conducted
by Big Village Insights among a sample of 1,806 U.S. homeowners who
purchased a home within the past 10 years and acquired a mortgage
when they bought their most recent home. The survey was conducted
from May 28 to June 9, 2024.
About Big Village Insights
Big Village Insights is a global research and analytics business
uncovering not just the ‘what’ but the ‘why’ behind customer
behavior, supporting clients' insights needs with agile tools, CX
research, branding, product innovation, data & analytics, and
more. Big Village Insights is part of Bright Mountain Media. Find
out more at https://big-village.com.
About TD Bank, America's Most Convenient Bank®
TD Bank, America's Most Convenient Bank, is one of the 10
largest banks in the U.S. by assets, providing over 10 million
customers with a full range of retail, small business and
commercial banking products and services at more than 1,100
convenient locations throughout the Northeast, Mid-Atlantic, Metro
D.C., the Carolinas and Florida. In addition, TD Auto Finance, a
division of TD Bank, N.A., offers vehicle financing and dealer
commercial services. TD Bank and its subsidiaries also offer
customized private banking and wealth management services through
TD Wealth®. TD Bank is headquartered in Cherry Hill, N.J. To learn
more, visit www.td.com/us. Find TD Bank on Facebook at
www.facebook.com/TDBank and on Instagram at
www.instagram.com/TDBank_US/.
TD Bank is a subsidiary of The Toronto-Dominion Bank, a top 10
North American bank. The Toronto-Dominion Bank trades on the New
York and Toronto stock exchanges under the ticker symbol "TD". To
learn more, visit www.td.com/us.
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version on businesswire.com: https://www.businesswire.com/news/home/20240710633928/en/
Monet Irving Corporate Communications Manager
Monet.Irving@td.com
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