Winning a home offer in this competitive, unaffordable market is an accomplishment for any buyer, but when more than a third of homebuyers between 2023 and 2024 purchased homes that exceeded their intended budget, there are consequences.
Since buying, 43% of new homeowners have struggled to make mortgage payments on time and 44% have taken on extra debt to maintain their lifestyles, according to a new survey from Clever Real Estate.
The St. Louis-based real estate company found that nearly 38% of homebuyers purchased a home over their budget, and half of all respondents (50%) accepted a higher interest rate than planned to secure the mortgage. The survey results also show that an overwhelming majority of buyers (85%) compromised on their priorities when purchasing a home – price being the most-compromised factor.
A slight drop in interest rates would give those buyers some reprieve, but originators shouldn’t wait with baited breath considering the Federal Reserve plans to keep rates steady until inflation cools further.
However, a drop in interest rates may seem like the best hope compared to a boost in income, since more than half of Americans (60%) who bought homes in 2023 or 2024 state that their finances have not improved since purchasing a home.
Among the buyers who purchased a home over their intended budget, 23% regret doing so. Nearly half of recent homebuyers (47%) say they feel in over their heads financially since purchasing their home.
Furthermore, 82% expressed at least one regret about the home-buying process, with excessive maintenance needs (28%) being the most common regret, with 35% attributing it to sellers' lack of transparency. Despite the difficulties of affording a home, 77% of prospective buyers surveyed said they have already started saving for a down payment. Nearly 60% say that process has made them feel financially overwhelmed.
In a separate survey, Clever found that a whopping 94% of home sellers support a new commission structure that would require the buyer to pay their own agent's commission. However, in this new survey, that percentage drops to 61% among buyers, half (50%) of whom would consider forgoing an agent entirely due to commission changes.
If they had to pay their agent, buyers say they'd lower their home-buying budget by an average of $13,167.
The overall experience of buying a home proved to be more stressful than anticipated for a majority (52%) of respondents.
