The Housing Headline
A survey of first-time buyers shows that low mortgage rates don’t drive home sales.
The News Behind The Housing Headline
Each year, the National Association of REALTORS® publishes its Home Buyer and Seller Generational Trends report, a 100-question survey made to more than 150,000 recent home buyers.
As part of its annual survey, the real estate trade group asks home buyers why they bought a home when they did.
In this year’s report, close to 75 percent of home buyers aged 38 and younger said they bought a home when they did because they were either “ready to buy,” or “did not have much choice” and had to purchase.
These are emotional and functional reasons for buying a home – not financial.
Only 12 in 100 home buyers said they bought because of the mortgage options available to them, or because of home affordability.
Why This Housing News Matters To You
There’s a popular narrative in real estate that low mortgage rates entice renters to break leases and otherwise churn renters into home buyers.
It’s a false narrative.
Renters don’t decide to buy homes because mortgage rates are low. As the Home Buyer and Seller Generational Trends Report shows, renters buy homes because they want to – or have to.
Here are a few of the most-cited reasons buyers under 38 gave the National Association of REALTORS® for why they wanted to buy. Note that none of the reasons is “cheap mortgage rates.”
- Desire to own a home of their own
- To have a larger home
- For a job-related relocation
- Marriage, divorce, or birth of a child
- Live closer to work or school
Of the 17 reasons provided, only one was money-related (“financial security”), and home buyers said giving their pets “a better home” was as crucial in their decision-making process as the “affordability of homes.”
There are plenty of reasons to buy a home. The ones that move markets tend to be emotional.
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You’re not going to get that advertised mortgage rate because that advertised rates is generic – and you are not.