A survey by Mphasis Digital Risk, an origination, risk, compliance and technology services company for the residential real estate lending industry, shows that a large majority of young Americans (66%) say they “routinely” go online to verify the value of houses belonging to friends and acquaintances.
The survey was conducted among 1,386 people age 46 and younger in the US, representing a broad spectrum of income levels, from low to upper-middle income, and shows that 79% of people looking for home values in online said the activity left them stressed, worried, or upset.
The top reason respondents gave for checking home prices through online inquiries was to use the search as a “benchmark to measure their own income and value” (59%), while others are trying to get “an idea of their friends’ income” (42%). More than half (56%) said their own home buying decisions are “very” or “somewhat” affected by their online searches.
“For the 80% of Gen Z and millennials who get stressed out by looking at friends and acquaintances’ home prices online, they need to remember that lenders don’t compare borrowers to others to qualify for a home loan.” said Jeff Taylor, founder and CEO of Mphasis Digital Risk. “They use the borrower profile, and you’d be surprised how much a borrower can afford. Even with interest rates entering summer 2023 higher by close to 7%, millions of people qualify to buy median-priced homes for as little as 5% less.”
According to the survey, 74% believe that owning a home is “part of the American dream.” For 87% “it is currently too expensive to buy a house”, and only 6% said that now “is an ideal time to enter the market and look for a house”.
In particular, respondents mainly blame the government for the lack of housing affordability and, in particular, would like to see authorities relax restrictions on lenders and zoning laws:
· 45% say state and local governments are to blame for current housing prices.
· 70% say the government “hasn’t done a good job” of making housing affordable.
· Many say the government should simply ease regulations that can inflate costs, with 62% calling for looser consumer protection rules and restrictions on lenders.
· Locally, 72% say municipalities are more lenient on zoning rules to allow for more housing or alternative types of housing (such as modular or 3D-printed).
Although recent sales of existing homes have plateaued, an increasing number of people have applied for home equity lines of credit (HELOCs), though not always for home improvements.
While 42% of those surveyed said that if they purchased a HELOC they would use it for home improvements, 37% would use it to pay medical bills or bills, and 28% would use it to pay for day-to-day expenses such as groceries, public services and travel.
In particular, the trend is consistent for households making less than $50,000 a year, with 39% reporting they would use a HELOC to pay their expenses, including 34% who would use one to pay for medical expenses or debt and 35% who I would use one to pay daily expenses.
40% of those surveyed said they would opt for a HELOC over other options, including traditional bank loans, peer-to-peer lending and credit cards. For lenders offering HELOCs or other products, the trend highlights the changing priorities of homeowners, as well as new considerations in the marketplace that lenders must assess when issuing HELOC products.
“Home appreciation in recent years has given a general boost to homeowners’ wealth, and responsibly tapping into this new capital is a wise choice for homeowners. This type of loan has lower rates than personal loans or credit cards, but borrowers should remember that the interest on one’s home equity loan is not tax deductible as it is on your first mortgage, unless you use the proceeds of the home equity loan for home improvements,” the report says.
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