American consumers still hold tight to the dream of one day owning their own home, but the initial down payment is the biggest deterrent for them to reach that goal, according to a report from Integrity Realty Resources (IRR). Overall, feelings remained positive in the still recovering housing market, but down payments paired with a struggling economy make individuals think twice before investing in the American Dream.
Non-homeowners ages 22 to 50 in 11 major markets were surveyed. According to the study, unemployment and job instability were major factors in not buying a home, even though 85 percent of potential buyers said that market conditions were favorable. Specifically, 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.
Benjamin Loughry, managing partner at IRR-Dallas/Fort Worth, told DS News that high downpayments, paired with the current foreclosure rates are the reasons that homeownership is decreasing.
"This segment of the population will be turning to rental housing instead, which will further boost the rebounding multifamily sector," Loughry said.
Responses also varied depending on area and age, with residents in Detroit being the least likely to purchase a new home in the next 12 months – 69 percent said they would abstain from buying – and those surveyed aged 30 or older had 76 percent say the fact that they've "always dreamed of owning" their own home as reason to buy.
While consumers debate over whether or not to buy a home and downpayment prices fluctuate along with the foreclosure rate, lenders would benefit from loan management software or even loan servicing software to find the right payment plan for each borrower.