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Low Inventory, High Prices Making Homebuyers ‘Anxious, Sad’

David Krechevsky
Aug 23, 2021
Today’s homebuyers are eager to use online platforms for their mortgage applications, but many acknowledge the digital process is not without complications

Nationwide Survey By Mphasis Also Finds Homeowners Feel ‘Stuck’ In Their Homes

  • While economy rebounds, many homeowners say prices, inventory leave them with few choices.
  • Survey also found just 18% would consider moving to a large city.

Just over half of prospective homebuyers nationwide are “sad or anxious” over the combination of record-high home prices and historically low housing inventory according to a new survey.

Conducted by Mphasis Digital Risk — an origination, risk, compliance, and technology services company for the residential real estate lending industry — the survey found 52% of the 2,100 prospective homebuyers who responded to the survey felt that way.

In addition, 53%, reported feeling "stuck" in their current home because buying a new home would be too expensive. And more than a quarter of respondents said they were concerned about having to "settle" for a less than ideal home.

The survey also found that, as remote work has made suburban or rural living more practical, only 18 percent said they would consider relocating to a large city.

"The economy is bouncing back, and interest rates are near all-time lows, but homebuyers are finding that low inventories and high prices are leaving them with few choices," said Jeff Taylor, co-founder & managing director of Mphasis Digital Risk and a board member of the Mortgage Bankers Association. "That takes a toll on people, and 16 months after the start of the pandemic, people are emotionally drained."

Amid a strong cultural trend toward environmental and social consciousness, 42% of respondents said a home constructed of sustainable materials and designed for energy efficiency was "somewhat important," but just 28% said such a consideration is "very important."

Despite concerns over prices and supply, the survey also found a modest appetite for low-cost alternative housing. Just one in five respondents said they had considered purchasing a 3D-printed prefab or modular home, while 16% said they'd consider a "tiny" home.

A larger number, however, said they'd consider a more conventional "fixer-upper" high-maintenance home, with respondents about evenly split between yes (49%) and no (51%).

At a time when U.S. homeowners collectively hold a record amount of equity in their homes, just 30% said they were considering a line of credit against that equity to finance an addition to their current home, with half ruling out such a loan.

When asked about less-conventional financing, one in 10 respondents said they'd used proceeds from cryptocurrency assets for a home purchase, while 9% said they'd use those funds for home improvement. Those same numbers applied to those who have used so-called “meme stock’ profits for a purchase or improvements.

"While there has been considerable focus on the booming housing market, the shift toward suburban and rural communities, and the impact of rising raw material costs on the supply of new construction, there has been far less notice paid to the human cost of home price inflation," Taylor said. "This is an ongoing issue that could affect Americans for years to come, as there continues to be an imbalance of supply and demand."

Digital Risk, LLC is an end-to-end origination, risk, compliance, and technology services company that offers differentiated solutions to the mortgage, consumer lending, and other regulated industries. Digital Risk LLC is a wholly owned subsidiary of Mphasis Ltd. To learn more, click here. To learn more about Mphasis, click here.

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