Personal Capital partnered with Morning Consult on a survey to gauge attitudes on home ownership. Given rising interest rates and high inflation, the question was whether more Americans were giving up the dream of owning a home—or at least putting it off for now.
According to the survey results, three out of four respondents will see homeownership as part of building wealth. But Americans across generations are more worried about the rising cost of homeownership than about the looming threat of recession.
Here’s what you need to know—and how you can help.
Rising home prices and mortgage rates
With home prices still increasing year-over-year, one in four survey respondents say they’ve decided to put off buying a home indefinitely. Mortgage rates were cited as the number one homebuying concern, even though over 75% expect a recession within two years.
With the rate for a conventional 30-year fixed mortgage close to 7%, would-be homebuyers are looking at several hundred dollars more in monthly payments than they would have paid at the beginning of the year.
With inflation increasing the cost of everything, many are adjusting their homeownership timeline. And some are looking at other ways to build personal wealth.
Attitudes across generations
Gen Z respondents were most likely to see homeownership as unattainable of all the generations represented in the survey results.
Though Millennials graduated around the 2008 financial crisis and experienced the COVID pandemic just when many were establishing their careers, only 18% saw homeownership as impossible for them, compared to 22% of Gen Z respondents.
Many remain confident they’ll be able to buy a home when they decide to take that step.
Gen X and Boomers (aged 45 to 65+) were most likely of all the generations to say they had no interest in buying a home, with 26% of Gen Xers and 44% of Boomers deciding it wasn’t for them.
That still leaves a majority across all generations holding onto the dream of home ownership.
The dream is still alive
Three out of four survey respondents see homeownership as a way to build personal wealth. But 43% see it as “one of several ways” to build that wealth—not as the #1 path to prosperity. Only 30% considered it an “important” part of growing their net worth.
While Americans of all generations still value home ownership, they’re also looking at alternative ways to build wealth, especially as rising rates and home values have priced many out of the market.
For those who can still afford to buy a home, the decision rests more on personal needs and lifestyle goals than on any cost-related issues.
The past few months have shown how quickly the housing market can shift. That’s why the decision to purchase real estate often relies more on your lifestyle goals than trying to time the market.
Alternative ways to build wealth
Judging by the survey results, more Americans are looking to alternative investments to build personal wealth:
- 42% — Retirement accounts—including 401(K) and Roth IRA
- 36% — High-yield savings accounts
- 25% — Individual stocks
- 20% — Mutual funds
- 12% — Bonds
- 11% — Cryptocurrency
- 7% — Exchange-traded funds
What you can do to help
Given these findings, it makes sense for real estate agents to collect and share data, including information highlighting the advantages of home ownership.
You can respect the financial decisions of your clients and prospects while still being a valuable resource for those with an interest in homeownership, even if they have to put it on hold for one reason or another.