Despite optimism, approximately 60 percent of
those surveyed express concerns about affordability related to
interest rates, overpaying and additional expenses.
Amid lingering concerns around affordability and interest rates,
most first-time homebuyers still feel optimistic about the housing
market in 2024 and are ready to spend, according to an annual study
from TD Bank, America's Most Convenient Bank®.
With home prices temporarily edging downward following their
all-time high in 2023, according to the January Case-Shiller Index,
TD's Annual First-Time Homebuyer Pulse found that of those looking
to buy a home in the next year, nearly three in four (74%)
respondents felt optimistic about the housing market. And nearly
all (97%) have already started taking initial steps in the
homebuying process.
TD Bank surveyed 1,009 Americans planning to buy their first
home in 2024 to gather insights around their feelings on the
current housing market, as well as their thoughts on overall
preparedness regarding home inventory and the costs associated with
purchasing a home.
Economic Conditions Still Pose Concerns but Buyers Remain
Positive
Perhaps with a renewed hope for lower rates coming mid-2024, 40%
of respondents agreed that right now is a good time to buy a home.
Additionally, more than three quarters (78%) of first-time
homebuyers felt their personal financial situations are in stable
condition in 2024.
“Based on the industry consensus, homebuyers can potentially
look forward to rates easing a bit, but the financial steps needed
to purchase a home should remain top of mind, with one of the most
important being to speak with a mortgage professional early in the
process,” said Steve Kaminski, Head of U.S. Residential Lending at
TD Bank. “Rates are central to affordability for many, but with a
moderate decline in rates forecasted, buyers will still have to
contend with low home supply and relatively high home prices. An
experienced lender can help consumers navigate the interest rate
and housing environment by providing mortgage options that can
support their budget and best fit their financial situation.”
Though some lowering of interest rates in 2024 seems imminent,
nearly two-thirds (63%) of first-time homebuyers cited rates as a
concern about their ability to afford a home in today’s market.
This is down just 1% from last year, revealing that despite
optimism, interest rates remain a top concern for those looking to
purchase a home.
This optimism has sprung into action with nearly all respondents
(97%) having already taken steps in the homebuying process. About
half (47%) have started saving for a down payment and nearly two in
five respondents (38%) have established a budget for their home
purchase.
The survey also revealed first-time homebuyers are willing to
spend more on their first homes, with 40% citing they plan to spend
$300,000 or more, up 9% from last year.
There’s Still More to Learn for First-Time Buyers
Despite 79% of low-to-moderate income (LMI) respondents
expressing confidence or neutrality in their financial literacy
regarding mortgages and homebuying, a surprising 46% remain unaware
of down payment assistance programs that require lower initial
investments.
In addition, over four in five LMI respondents cited the
affordability of a down payment (82%) and affordability of a
mortgage/other monthly expenses (81%) as one of the top three
barriers they face as they begin the homebuying process.
“Down payments have remained an obstacle to the wealth vehicle
of homeownership, but there are tools to alleviate some of the
burdensome upfront costs,” said Kaminski. “Educating first-time
homebuyers about the resources down payment assistance programs can
provide, as well as the associated monthly costs of homeownership,
can help them accomplish their dream of owning a home and
strengthen their financial position over the long-term.”
Forever Homes are Top of Mind, Location Preferences
Vary
This year’s data also saw an increase in respondents’ desire for
forever homes, with 48% of respondents expressing their intention
to purchase one, a 7% uptick from 2023. Conversely, interest in
fixer-uppers or starter homes has decreased, with only 52% of
respondents considering such properties, down 7% from last year.
Among those seeking fixer-upper or starter homes, 40% hope to find
a more affordable home.
When it comes to priorities in their home purchase, proximity to
schools and workplaces emerged as top concerns for first-time
buyers. Over one quarter (26%) cited access to quality schools and
childcare as one of their top two considerations, while 22%
emphasized being close to their workplace. Additionally, amenities
such as backyards or pools (20%), access to dining and shopping
(20%) and proximity to family (19%) were among the top
priorities.
There's also a notable desire for suburban living among
first-time homebuyers. More than two in five (43%) first-time
homebuyers prefer suburban areas over city living (28%), small
towns (17%), and rural areas (12%).
Urban living is also growing in popularity, with the number of
first-time homebuyers who prefer large cities or metro areas
increasing by 6% over the last year. Notably, Gen-Z homebuyers are
particularly driving the interest in urban living, with 31%
expressing a desire for big city/metro area residences, compared to
29% of millennials and only 22% of Gen-X and Baby Boomers.
Other Top Considerations
- Overpaying Fears Remain: In light of housing prices over
the past several years and the competitive marketplace, nearly
two-thirds (62%) of respondents have concerns about overspending on
their first home.
- Split on Lender Engagement: Mirroring the 2023 results,
respondents are most likely to believe the best time to engage with
a lender is as soon as they decide to buy a home, before looking
(42%). One in three (33%) feel the best time is after they begin
looking at houses, 25% believe lender services aren’t necessary
until they find the home they want to buy.
- Rising Popularity of ARMs and Down Payment Assistance:
While 84% of first-time buyers plan to borrow for their home
purchase, with 64% opting for mortgages, there's a sharp rise in
interest in adjustable-rate mortgages (ARMs), with 23% considering
them—up from 12% in 2023. Additionally, over two in five buyers
(42%) anticipate utilizing down payment assistance programs, up
from 35% in 2023. These trends reflect a growing willingness among
buyers to explore diverse financing options to achieve
homeownership.
Survey Methodology
This online CARAVAN® survey was conducted by Big Village among a
sample of 1,009 U.S. adults ages 18 and older who plan to buy their
first home this year (in 2024). The survey was live on January
10-18, 2024. In addition, 247 interviews were conducted among low
to moderate income respondents, defined on a per-state basis as
having household income within 50% to 80% of the median family
income for that state.
A similar survey was conducted from February 13 – March 1, 2023,
among a sample of 1,007 first-time homebuyers.
About Big Village
Big Village Insights is a global research and analytics business
uncovering not just the ‘what’ but the ‘why’ behind customer
behavior, supporting clients’ insights needs with agile tools, CX
research, branding, product innovation, data & analytics, and
more. Big Village Insights is part of Bright Mountain Media. Find
out more at https://big-village.com/.
About TD Bank, America's Most Convenient Bank®
TD Bank, America's Most Convenient Bank, is one of the 10
largest banks in the U.S. by assets, providing over 10 million
customers with a full range of retail, small business and
commercial banking products and services at more than 1,100
convenient locations throughout the Northeast, Mid-Atlantic, Metro
D.C., the Carolinas and Florida. In addition, TD Auto Finance, a
division of TD Bank, N.A., offers vehicle financing and dealer
commercial services. TD Bank and its subsidiaries also offer
customized private banking and wealth management services through
TD Wealth®. TD Bank is headquartered in Cherry Hill, N.J. To learn
more, visit www.td.com/us. Find TD Bank on Facebook at
www.facebook.com/TDBank and on Instagram at
www.instagram.com/TDBank_US/.
TD Bank is a subsidiary of The Toronto-Dominion Bank, a top 10
North American bank. The Toronto-Dominion Bank trades on the New
York and Toronto stock exchanges under the ticker symbol "TD". To
learn more, visit www.td.com/us.
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version on businesswire.com: https://www.businesswire.com/news/home/20240313768943/en/
Media: Monet Irving Corporate Communications Manager
Monet.Irving@td.com
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