While inflation, high home prices, and elevated interest rates are challenging affordability, many prospective first-time home buyers feel more certain about their financial situations, according to a survey by TD Bank.
The TD First-Time Homebuyer Pulse found 54% of respondents indicate they are better off financially than two years ago and 39% of prospective first-time buyers believe it is a good time to buy a home. Almost half of respondents reported they have begun to save for a down payment.
Despite the increase in sentiment, 69% of respondents are concerned about the economy, and 64% are concerned about their ability to afford a home amid rising interest rates. Nearly a third of respondents reported the top reason for delaying their home buying plans is the inability to afford the home they want due to rising interest rates.
Rising rates are shifting the target home for first-time buyers: 59% of respondents who are looking to purchase a home this year indicate they want to pursue a fixer-upper or starter home due to affordability concerns.
However, rising rates have caused some prospective buyers to develop healthy financial habits, according to TD Bank. Over 40% of respondents have begun monitoring their credit report or taken steps to improve their credit score. Additionally, 48% have established a home ownership budget for their first-time home purchase in 2023.
While many prospective first-time buyers are priced out of the home buying market, 40% of survey respondents reported rising rent prices as a driver to enter the home buying market.
TD Bank’s survey generated responses from 1,007 Americans planning to buy their first home in 2023 to learn more about their path to purchasing a home, as well as their thoughts on preparedness for the process as housing costs fluctuate.
