BAM’s Key Details:
- Over one million people have used Zillow’s down payment assistance in the last year.
- November brought a bit of relief for buyers, with mortgage rates and home prices dipping in most markets.
- Even with some softening in the market, many buyers continue to struggle with affordability.
In December 2021, Zillow launched down payment assistance information on homes listed for sale on the Zillow app, in partnership with Down Payment Resource.
A year later, over one million people have used the resource.
It’s no surprise that buyers are looking for ways to make their home purchases more affordable. And while November brought a slight dip in mortgage rates and home prices in many markets, monthly mortgage costs are still up 66.1% from last year, according to the latest Zillow® Market Report.
One thing we know for sure: the most helpful real estate agents act as a guide to much-needed resources for those struggling with affordability.
November’s affordability relief
Buyers finally felt some relief this fall as competition eased, mortgage rates decreased below 7%, and home prices started to drop.
While housing economists don’t expect a significant decline in home prices (or mortgage rates) in 2023, November’s numbers are a positive sign that buyers may fare better in the new year.
The housing market entered a deep freeze this November as buyers paused their purchasing plans, likely till after New Year’s in many cases. The two big questions are whether mortgage rates will continue to decline, and whether that will be enough to bring buyers back in time for the spring selling season. In the meantime, those on the prowl for a house will benefit from motivated sellers, unusual bargains and a welcome lack of competition.
What home buyers need
Even with some relief, many still need resources that make buying a home more affordable. And that starts with saving a down payment.
A recent Zillow survey found that half of prospective buyers have not saved enough for a down payment on a typical home valued at $358,000, with a majority planning to put down less than 20%. Even with a lower down payment, those earning the U.S. median income struggle to save up—taking over nine years to save a 5% down payment, according to Zillow.
Homeownership remains the American Dream because it is one of the most powerful avenues for building wealth, and a source of long-term social and financial stability. Unfortunately, many people sideline themselves from buying a home because they don’t know that there are thousands of homebuyer assistance programs that may be able to help them overcome common affordability challenges, such as down payment and closing costs.
How are you sharing resources?
It’s easy to assume that prospective buyers are doing their research before making a home purchase. But most home shoppers spend more time researching a new vehicle purchase or vacation than they do researching mortgage lenders. Others get their information from fear-inducing headlines—or worse yet—the comments section of a misinformed TikTok.
This is why it’s critical for you to educate your market on all aspects of the real estate industry, from explaining the home buying process to how to connect with trusted vendors to saving up for housing costs.
And right now, the topic of affordability is at the top of every buyer’s mind. How are you sharing resources to make home buying more affordable?
Don’t wait for prospective buyers to seek out answers on their own—as many are unaware that they have options when it comes to things like a down payment, rate buydowns, and negotiations to save them money. Spread the word on resources in your market on social media, host in-person or virtual information sessions, and send guides to all your prospects.
It may be the resource needed to open the door to more conversations—and more closings.