BAM Key Details: 

  • A survey conducted by Mphasis Digital Risk shows nearly seven out of ten (66%) respondents go online to check the value of homes owned by friends and acquaintances; 79% of those are bothered by what they learn. 
  • Younger generations (Millennials and Gen Z) blame the government for the short supply of affordable housing. 
  • More Americans are applying for home equity lines of credit (HELOCs), but not for the usual reason. 

Would you go online to check out the value of a home belonging to a friend or acquaintance? 

A new survey conducted by Mphasis Digital Risk suggests this is something people do—especially younger Americans with low to upper-middle incomes. 

Of the 1,386 people aged 46 and younger responding to the survey, a full 66% admitted to going online to check out the value of homes owned by non-relatives in their social circle. And almost 80% of them end up getting “stressed, concerned, or upset” by what they find.

So, why check your neighbor’s / friend’s / kid’s preschool teacher’s home value, anyway?

According to 59% of respondents, the primary reason given was to use their findings as a “benchmark to measure [their] own income and worth.” Forty-two percent said they were trying to get a “sense of their [friends’] income.” 

More than half (56%) say their own home-buying decisions are “somewhat” or “very much” influenced by the results of these online searches. 

For the 80% of Gen Z and millennials stressed by viewing home prices of friends and acquaintances online, they should remember that lenders don’t benchmark borrowers against others to qualify for a home loan. They use the borrower’s profile, and you would be surprised how much a borrower can afford. Even with interest rates entering the Summer of 2023 higher at near 7%, millions of people qualify to buy median-priced homes with as little as 5% down.

Jeff Taylor

Founder and Managing Director of Mphasis Digital Risk

Seventy-four percent of the survey respondents said they currently own a home. 

Pursuing the American dream

Almost three out of four (74%) respondents agreed that homeownership is “part of the American Dream.” Nearly nine out of ten (87%) say buying a home is “currently too expensive,” and only 6% say now is an ideal time to shop for a home. 

What the survey results show, aside from the respondents’ (understandably) dim view of housing affordability, is their reliance on digital tools to identify and evaluate their prospects. 

And that reliance on tech creates an opening for mortgage lenders to move more of their services to the digital realm—meeting potential buyers where they are. 

For the most part, respondents blame the government more than anything else for the lack of housing affordability. To address this, they would like local and state authorities to loosen zoning laws and restrictions on lenders: 

  • 45% blame state and local governments for current housing prices
  • 70% believe the government “hasn’t done a good job” of making homes affordable
  • Many say government authorities should lift restrictions that drive up costs, with 62% asking for looser consumer protection rules and relaxed restrictions on lenders.
  • 72% say municipalities are more flexible with zoning rules to allow more homes—or alternative types of homes, including modular or 3D-printed. 

It’s surprising to see that 62% of younger Americans call for lower consumer protection rules and restrictions on lenders. These rules were put in place after the Great Financial Crisis – which was caused by overly loose lending guidelines – to protect borrowers from getting into loans where the costs are low to start, then ballooned later.

But, first-time buyers should definitely talk to their local lender, because there are many specialty loans and down payment assistance programs that can help them in their community. These great Federal, state, and local programs never make headlines, but they exist, and your local lender knows about them.

Jeff Taylor

Founder and Managing Director of Mphasis Digital Risk

More HELOCs, different reasons

A growing number of people have been applying for home equity lines of credit (HELOCs). And their reasons for doing so highlight the financial stress many Americans are experiencing. 

While more than two out of five (42%) respondents say they would use a HELOC for home improvements, 37% would use it to cover medical bills or pay off debt, and 28% would use it to cover day-to-day expenses like food, gas, utilities, etc. 

Among households earning less than $50,000 a year, 39% say they would use HELOCs to cover expenses, including— 

  • 34% who would use a HELOC to pay off medical bills or debt
  • 35% who would use one to cover day-to-day expenses

Four in ten (40%) say they would prefer a HELOC over other financing options—including traditional bank loans, loans from their peers, and credit cards. 

Lenders providing HELOCs should take note of this trend and what it means for prospective borrowers—especially those “borrowing from Peter [at a lower interest rate] to pay Paul.” 

Home appreciation in recent years has given an overall wealth lift to homeowners, and responsibly tapping into this new equity is a good option for homeowners. This kind of loan has lower rates than personal loans or credit cards, but borrowers should remember that interest on one’s home equity loan is not tax deductible like it is on your first mortgage unless you use the home equity loan funds for home improvement.

Jeff Taylor

Founder and Managing Director of Mphasis Digital Risk

That said, consumers stressed about medical or credit card debt are less likely to care that HELOC interest isn’t tax-deductible when used for purposes other than home improvement. 

What’s more concerning is the percentage of consumers using HELOCs for day-to-day expenses. 

Takeaways for real estate agents 

From jealous home research to the lack of housing affordability to pursuing HELOCs for financial relief, today’s consumers—homeowners and would-be buyers alike—are under a lot of stress. 

One thing you can do to help alleviate some of it is to address misleading information being spread by those more intent on causing a reaction than on actually helping people. 

The more people you can help make sense of today’s market, the less likely they are to be influenced by doom-and-gloom headlines. And the less likely they are to make decisions they’ll regret.