More homes are expected to hit the auction market this year as the forbearance moratorium expires, creating additional inventory for buyers in an otherwise tight supply market. ServiceLink, provider of mortgage-tech related services, unveiled data from a recent survey that shows a majority of consumers are open to achieving homeownership through alternative options like auctions.
The online survey, conducted by The Harris Poll on behalf of ServiceLink, includes insights from more than 3,000 consumers to understand their perception of the overall housing market and buying a home at auction. The survey found that most consumers are willing to consider it due to the lower prices and faster closing times.
The survey found more than three in five U.S. consumers (62%) would consider buying a home at auction with one in ten (10%) saying they’ve already done so. The figures are quite impressive considering one in four of U.S. consumers (28%) were not even aware they could purchase a home at auction.
Millennials (ages 25-40) are more willing to consider buying a home at auction compared to their elders. According to the survey, 75% of millennials would consider buying their home at auction compared to 65% of Gen Xers (ages 41-56) and 54% of baby boomers (ages 57-75). One fifth of millennials (21%) have already bought a home at auction, compared to 13% of Gen Z (ages 18-24), 6% of Gen Xers, and 4% of baby boomers.
Price and speed are the driving factors for consumers when considering buying a home at auction. Potential cost savings (70%) and faster homebuying process (57%) are the main motivating factors for more than half of U.S. consumers. Conversely, not being able to see the home in person prior to buying (66%) and not being able to get a professional inspection (62%) are factors that would stop consumers from purchasing a home at auction.
Consumers also believe it’s prudent to buy a home at auction now, since they anticipate the real estate market will remain competitive throughout 2022. Many U.S. consumers anticipate the suburbs will thrive with 22% of survey respondents saying the suburbs will continue to be popular areas for homebuying in 2022. Only 12% of respondents believe those who migrated out of the cities during the pandemic will eventually return to live there.
Other market outlooks from the survey reveal almost half of U.S. consumers (45%) will expect home prices to increase in 2022. Yet, almost two-fifths of U.S. consumers (39%) believe there will be an increase in foreclosed homes available for purchase at auction in 2022.
“It's not surprising that millennials are pursuing new opportunities to achieve homeownership, particularly in the current real estate market where they are facing challenges due to high prices and low supply,” said Miriam Moore, president of default services at ServiceLink. “We expect that more auction properties will hit the market next year through foreclosure and buying homes at auction will become more mainstream as consumers look to buy quickly and at competitive pricing.”
