First-time homebuyers are often overwhelmed by unexpected homeownership costs: study
Buyers often forget about home improvements and emergency repairs. (Stock)
Many first-time homebuyers approach buying a home with enthusiasm but lack the hands-on experience to know what they may face when buying a home for the first time. Nearly 41% of first-time buyers are less aware of the costs associated with owning a home, compared to 31% of buyers who have owned multiple homes, an Angi study found.
First-time buyers often underestimate home maintenance and improvement costs. Plus, many don’t consider the financial burden of unexpected home emergencies.
The cost of home improvements was the most surprising for study respondents, with 43% of younger homeowners ages 18 to 24 reporting being uncomfortable with the amount they had to spend within the first six months of owning their home.
Out of a dozen different projects, just over 44% of first-time buyers spent money on interior painting. Installing new appliances came in second with 38% of respondents saying they had to replace appliances like their stoves or refrigerators.
Other projects most buyers face in the first year of owning a home include landscaping, installing smart home devices and remodeling bathrooms.
Despite completing many home projects within the first year of buying, 30% of homeowners still reported regretting not completing more projects in the first six months of owning their homes.
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MOST HOMEOWNERS WOULD RATHER REMODEL THEIR HOME THAN BUY ANOTHER HOME: STUDY
Most prospective homebuyers think renting is detrimental to their financial future
Renting an apartment or home may be less expensive than buying in some parts of the country, but many U.S. adults believe continuing to rent has a negative impact on their financial future, Bank of America reported.
About 70% of prospective homebuyers feel they’re not making a substantial long-term investment in their future when renting. Another 72% also worry that rent increases could hurt their long-term financial goals. Still, renting remains a strong option, particularly as home prices and interest rates remain high.
"Given the highly competitive homebuying market, renters are unsure whether now is the right time to buy," Matt Vernon, the head of consumer lending at Bank of America, said. "That said, our research continues to show that the vast majority of prospective homebuyers overwhelmingly feel buying a home, now or in the future, is the best decision for them in the long run."
A strong impulse to own property is why 37% of respondents who currently rent still plan to make moves to buy a home in the future. A majority of prospective buyers are so eager to buy because it brings emotional fulfillment to own a home. Additionally, 67% of buyers want the stability that owning a home provides over renting.
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AMERICANS TYPICALLY SPEND ABOUT 24% OF THEIR INCOME ON MORTGAGE PAYMENTS
There are a few states where buyers can still find homes under $200,000
The average home price in the U.S. is about $420,000. These high prices, largely established during the housing boom the pandemic brought on, have yet to slip in many areas of the country. However, there are still certain cities where prices are nearly 50% cheaper than the current average.
The South remains largely affordable in many cities and suburbs, according to a Realtor.com report. Fort Lauderdale, FL has two suburbs where the average price for a home is under $200,000. In Lauderdale Lakes, the average home price is $175,000. The neighboring suburb, Lauderhill, boasts average prices of $149,000.
"Florida markets like Lauderdale Lakes are seeing a surge in affordable condos, providing viable options for those looking to downsize without breaking the bank," Hannah Jones, a Realtor.com senior economic analyst explained.
Other southern states also have more affordable housing options. Albany, a city in southwestern Georgia, has homes for sale that are 40% less expensive than Atlanta.
Outside the South, Detroit, MI has the most listings under $200,000, with over 1,500 listings currently on the market as of June. As the city undergoes revitalization, many of these affordable homes are classified as fixer-uppers.
Cleveland, OH also has a long list of homes for under $200,000, with over 500 listings on the market. The capital of Michigan, Lansing, is one of the other affordable cities in the state. Over two-thirds of homes are listed under $200,000.
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