Homebuyers Turn to Less Conventional Means To Attain Ownership — Which Generations Are Changing the Game?
Written by
Vance Cariaga
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Daria Uhlig
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With home prices soaring to record highs and mortgage rates already ticking higher in 2022, house hunters have to be creative to gain entry to the real estate market. For many younger Americans, this means buying a home without seeing it first or buying at auction, according to a new homebuying report.
The 2022 ServiceLink State of Homebuying Report, released on Tuesday, April 5, by digital mortgage services company ServiceLink, found that buyer fatigue is becoming more fully ingrained in the housing market as high costs and complicated market conditions have led many homeowners to put off purchasing a new home.
The survey was conducted by the Schlesinger Group in early January and polled 1,000 homeowners who have purchased a home in the last five years. Nearly a quarter (24%) of respondents considered buying another home in that time frame but ultimately decided against it. Almost half (44%) said prices were too high, up from 31% in the 2021 survey. Twenty-eight percent cited low housing inventory as a reason not to buy — a big jump from last year, when only 8% cited low inventory.
Meanwhile, the survey also found that Gen Zers and millennials will continue to play a bigger role in the housing market in 2022. Among the key findings:
- 26% of Gen Zers and millennials are likely to buy a new home this year vs. 12% of Gen Xers and 6% of baby boomers.
- 23% of Gen Zers and millennials would purchase a home without seeing it in person first, compared with16% of Gen Xers and 5% of baby boomers.
- 55% of Gen Zers and millennials either have bought, or are willing to buy, at auction, vs. 50% of Gen Xers and 23% of baby boomers.
- 32% of Gen Zers and millennials plan to refinance in 2022, compared with 23% of Gen Xers and 9% of baby boomers.
“As bidding wars, low inventory and rising interest rates continue to intensify the competition, buyers have had to get creative in order to come out ahead in this challenging real estate market,” Dave Steinmetz, ServiceLink’s president of origination services, said in a press release. “A growing number of buyers are embracing technology, and many are open to new pathways to achieve homeownership. This indicates there is an opportunity for lenders to provide more targeted resources and guidance to buyers throughout their homebuying journey.”
Overall, one-third of respondents said they would consider buying a home at auction, while 11% have already purchased a home this way. The top reasons for buying at auction are potential cost savings (72% of respondents), a faster homebuying process (44%) and the ability to bid remotely via an app or online (37%).
Nearly one third (31%) of respondents said their primary use for a home purchased at auction was to fix and flip it. A slightly smaller percentage (29%) said they would use it as their primary residence, while 23% said they would use it for rental income. Gen Z/millennials are most likely to buy at auction to use the property for rental income (28%), compared to 19% of Gen X and 11% of baby boomers.
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