More than three times as many potential homebuyers were interested in buying a home as an investment in March compared to the same month last year, according to a survey by Realtor.com operator Move Inc.
In general, consumers purchase an investment with the hope that it will appreciate over time and/or generate income in the future. For homes, that usually means that the buyers don’t live in the home and rent it out instead.
In March, 17.2 percent of consumers planned to purchase a home as an investment in the near future. One year ago, only 5.6 percent did.
Of those potential investors, 12.3 percent plan to buy a property entirely in cash, while 12.8 percent said they would put down more than half the sale price in cash and borrow the rest. Nearly half, 49.2 percent, would put down less than half the price in cash, the report said.
Almost half, 46.5 percent, expect to own the property for six or more years; 16 percent for between two and five years; and 10.6 percent for six to 24 months, the report said.
Interest in purchasing a foreclosure as an investment rose to 16 percent in March, from 11.3 percent in October. At the same time, interest in buying a foreclosure as a primary residence fell to 26.5 percent, from 31.3 percent in October.
Lifestyle and economic needs were foremost in the minds of potential homebuyers and sellers. About half, 49 percent, of homeowners would buy another home if they could sell their current home for an amount equal to or more than what they paid on the property, the report said. Among homeowners 25-34, that figure rises to 68.2 percent.
A fifth of current homeowners want to buy a home because they need more space for their growing family, and 14.1 percent want to be able to send their children to a better school, the report said. The biggest share of current homeowners, 25.4 percent, want to buy another home to lower their monthly expenses.
Of the (49.2 percent of) homeowners who have delayed selling their home, 69.1 percent reduced their daily living expenses in order to pay their current mortgage, the report said. About a third of homeowners have downsized to a smaller home, while another third put off having more children. …CONTINUED
Some gender differences emerged in the study. About 45 percent of women were not able to sell their current home and buy a new one that "better fits their needs" in a more affluent neighborhood, compared with about 27 percent of men.
About a fifth of consumers said they planned to buy a home sometime in the next one to five years, and about half would be first-time homebuyers. Of those willing to take the plunge for the first time, 55 percent were men.
"Concerns around employment and their overall economic situation are causing many people to wait until the economy improves before they commit to one of the largest purchases they’ll most likely make in their lives," said Errol Samuelson, Move’s chief revenue officer, in a statement.
While perceptions of home affordability improved in the past year, Americans still think homes are less affordable than they actually are, Move said.
In March, 41.5 percent of consumers thought a family making the national median income of $52,029 could afford about half the available homes for sale in their area, the report said.
"In fact, a median-income family today can afford approximately 70 percent of the homes for sale on the Move network," the company said.
Move reported a 7.6 percent increase in traffic on its network of Web sites, to 8.4 million in February, from 7.8 million in the same month last year. In February, the network’s most frequently searched metro areas were Chicago; Los Angeles-Long Beach; Detroit; Dallas; Philadelphia; Tampa-St. Petersburg-Clearwater, Fla.; Phoenix-Mesa; Boston; Atlanta; and Las Vegas.
The company based the survey’s results on 1,004 interviews conducted from March 19-21, 2010, through OmniTel, a weekly national telephone omnibus service of GfK Custom Research North America.
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