A new survey finds a housing market with plenty of obstacles but room for optimism.
If you’re hoping to pursue homeownership in 2021, you’ll be facing a tough year. While low interest rates make borrowing less expensive, record-high home prices, record-low inventory and tightened borrowing criteria are being exacerbated by the pandemic.
These circumstances dominated 2020, quashing (temporarily) many an American dream. A December survey of 675 nonhomeowners by the Harris Poll for the NerdWallet 2021 Home Buyer Report found that about 23 percent had plans to buy a home at the start of 2020, but 39 percent of that group delayed or canceled those plans, citing the pandemic and its effects.
This week’s chart lists common roadblocks that potential home buyers believe stand in the way of ownership. A lack of sufficient income, an inadequate credit score, a lack of inventory, and the coronavirus in general were the main concerns. (Survey results surpass 100 percent because respondents were allowed to check multiple answers).
Yet the NerdWallet report found would-be buyers optimistic — 11 percent of respondents answered that they plan to buy in the next 12 months. Unfortunately, the math doesn’t support those hopes. Eleven percent of the population adds up to about 28 million potential buyers in the U.S. competing for about 5 million homes (the number sold in each of the last several years).
So where is the optimism coming from?
“Maybe there’s a sense of, ‘we hit a low’ in 2020, so there’s nowhere to go but up?’” suggested Elizabeth Renter, the author of the NerdWallet report. About half of those who planned to buy in 2021 believed their income, their credit rating or the economy would be stronger in the coming year.
In fact, Ms. Renter noted, a rose-colored view has been a common theme in previous surveys. Data be damned, optimism among wishful first-timer home buyers could be just the fuel the American dream requires.
“People buying their first home were more likely to stick to their plan in 2020,” said Ms. Renter. “Fifty-nine percent of first-time buyers who planned a purchase in 2020 said they did or were in the process. Only 28 percent of second or subsequent home buyers who planned a purchase followed through in 2020. That’s a big difference!”