IRR: Down Payment Biggest Obstacle to Homeownership
By: Tory Barringer
Feelings about homeownership remain positive in the face of a diminished market, but an uncertain economy and increasing down payments are keeping Americans from making purchases, a report from Integra Realty Resources (IRR) said.
Wednesday’s report detailed results from an IRR-commissioned survey of non-homeowners ages 22-50 in 11 major markets. While 85 percent of potential buyers indicated that market conditions are favorable for purchasing a home, unemployment and job instability make many respondents reluctant or unable to buy a home.
According to the study, 21 percent of respondents are not planning to buy a home due to an uncertain economic outlook, while 24 percent are afraid of making a bad investment. Thirty-one percent are not planning to buy a home because of a lack of a down payment. As banks and lenders have become more stringent, down payments have escalated to a point where many Americans can’t afford to make the investment.
“Some respondents feel that purchasing a home may be too risky in the near future,” said Benjamin Loughry, MAI, MRICS, managing partner at IRR-Dallas/Fort Worth. “The down payment conundrum continues to suppress demand with no easy resolution in sight. For this reason and the continuing foreclosures is why the homeownership rate is decreasing. This segment of the population will be turning to rental housing instead, which will further boost the rebounding multifamily sector.”
Responses tended to vary according to different areas. Respondents in Detroit are least likely to purchase a home in the next 12 months (69 percent abstaining from purchases). Respondents in Miami were the most unsure about their home buying future, with 36 percent saying they were uncertain.
More than three-quarters (76 percent) of those planning to buy a home who are age 30 or older cited “I have always dreamed of owning my own home” as their reason to buy. While that enthusiasm may be shared by some non-buyers, the ability to act on it remains out of reach.
“Clearly, the American dream of homeownership lives on,” said Jeffrey Rogers, FRICS, JD, MBA, president & COO of IRR. “But if you go deeper into the research, this may be only in a fantasy not to be realized in the current economy.”
Since its launch, DS News magazine has positioned itself at the forefront of an
evolving industry. Always current with the most up-to-date
default servicing news, DSNews.com keeps you informed through daily Web casts,
community forums, and a wide range of industry resources.