Do Buyers Have Unrealistic Expectations for the Market This Year?

Buyers are reporting they are eager to finally sign their closing contract on their first home.

However, how realistic are their expectations in today’s market? According to a recent survey from NerdWallet, 83% of consumers reported that buying a home is a priority. Around 11% of U.S. residents, or 28 million people, plan to purchase in 2023. Yet, for those 11% who plan to buy this year, they reported they hope to spend $269,200, on average. Comparatively, according to data from NAR, the average home price in the U.S. in December was $366,900. Among all future buyers in the survey, 86% said homes on the market currently are overpriced.

Current economic uncertainty is also causing homebuyers to pause. About 32% of consumers said they feel worse about being able to buy a home this year, but 28% said they feel better about it. Of those who feel worse, 58% said a worsening economy is to blame, 57% said it is higher mortgage rates and 57% said they expect home prices to be more expensive. More than two-thirds (67%) feel that a housing crash is coming in the next three years. But it’s not just the economy. Consumers report their own financial struggles, 24% said they expect to have have less in savings this year, 22% said they believe they will have less income and 20% said they expect to have more debt.

Ultimately, many buyers are aware of their shortfalls. More than one-third (34%) said they don’t have enough for a down payment, 31% said their income is too low, 30% said their credit score is not good and 28% said the current economic climate are all preventing them from homeownership. To help overcome these obstacles, 42% said they are saving more for a down payment, 38% plan to move somewhere more affordable, 37% plan to wait for mortgage rates to drop and 26% are now planning to buy a smaller home.

Nearly 70% of consumers who tried to buy in 2022 were unsuccessful. Around one-quarter said they made an offer, but did not go under contract, 26% said they delayed plans due to high existing home prices and 25% postponed their plans because they could not find a home. A more balanced market and knowledgeable Realtors® can help these consumers achieve their dreams of homeownership.