CHICAGO, IL--(Marketwired - Oct 30, 2014) -
- Report shows home buyers split on whether they can afford their dream home
- While positive about the process, biggest anxieties include finding something wrong with the house and fear that housing prices will drop post-purchase
- According to BMO Economics, recent drop in mortgage rates points to a pickup in housing market activity
According to a survey released today by BMO Harris Bank, American house hunters visit an average of 10 homes before making a purchase, with about half (51 percent) spending up to six months searching the market.
The report, conducted by Pollara, also revealed:
- Slightly more than half (52 percent) of home buyers currently on the market believe they will find their dream home in their price range, while 48 percent say it's impossible
- Another 71 percent are willing to settle for something less than perfect
- Three quarters (77 percent) of home buyers say they'll know immediately when they've found their ideal house
"It's important when house hunting to take the time, not only to find a house that fits with what you want in a home, but also to find one that fits with your financial situation," said Kevin Christopher, Head of Mortgage Sales, BMO Harris Bank. "The rule of thumb is total housing expenses should not consume more than one third of total household income."
With Home Buying Comes Mixed Emotions
|Feelings Associated with Home Buying||All Home Buyers||First-time Home Buyers|
|Excited||44 percent||47 percent|
|Hopeful||33 percent||43 percent|
|Cautious||32 percent||26 percent|
|Optimistic||28 percent||26 percent|
|Happy||26 percent||37 percent|
|Anxious||25 percent||31 percent|
While overall stress levels about the home buying process are moderate, Americans still have some concerns. Their biggest worry is that they will find something w rong with the house once they move in (79 percent). In addition, 69 percent fear that housing prices will drop after the purchase, and 61 percent fear the possibility of not being able to afford their mortgage.
"The housing market lost some of its forward momentum earlier this year, in the wake of higher mortgage rates and as the availability of credit was constrained by uncertainty over new regulations. The latter, as anticipated, proved to be temporary," said Michael Gregory, Head U.S. Economics, BMO Capital Markets.
"In the third quarter of this year, mortgage lending standards were being relaxed more prolifically than at any other point since the Federal Reserve's new survey began in 2007," added Mr. Gregory. "Meanwhile, 30-year fixed mortgage rates have dipped back below the 4 percent level in recent weeks, for the first time since the spring of 2013. Both of these developments point to a pickup in housing market activity, in terms of turnover and homes -- yes, even 'dream homes'-- available for sale."
Among first-time home buyers, only 13 percent are currently pre-approved for a mortgage; however, 83 percent plan to go through the process before they purchase a home. Those pre-approved for a mortgage say it helps mitigate the stress of home buying:
- 98 percent say pre-approval takes the worry of financing out of shopping for a home
- 87 percent believe a pre-approval gives a better idea of what can be spent
- 68 percent say the pre-approval process was easy
"Pre-qualification is something we encourage house hunters to do before looking for a new home. It makes it easier to put in a serious offer when the time comes," added Mr. Christopher. "At BMO Harris you can get pre-qualified for up to 90 days, allowing you to take the time to search for the right house."
For more trends, ti ps and tools to help you plan for your financial future, including buying a home, visit bmoharris.com/YourFinancialLife.
Survey results cited in this report are from a Pollara survey commissioned by BMO Harris Bank using interviews with an online sample of 2,500 Americans conducted between April 1st and 7th, 2014. The margin of error for a probability sample of 2,500 is ± 1.96%.
About BMO Harris Bank
BMO Harris Bank provides a broad range of personal banking products and solutions through more than 600 branches and approximately 1,300 ATMs in Illinois, Wisconsin, Indiana, Kansas, Missouri, Minnesota, Nevada, Arizona and Florida. BMO Harris Bank's commercial banking team provides a combination of sector expertise, local knowledge and mid-market focus throughout the U.S. For more information about BMO Harris Bank, go to the company fact sheet. Banking products and services are provided by BMO Harris Bank N.A. and are subject to bank or credit approval. BMO Harris Bank® is a trade name used by BMO Harris Bank N.A. Member FDIC. BMO Harris Bank is part of BMO Financial Group, a North American financial organization with approximately 1,600 branches, and CDN $586 billion in assets (as of July 31, 2014).