Nearly two-thirds of millennials have new home buyer regrets, survey finds
In today’s highly competitive real estate market, it’s all too common for buyers to rush into a deal that doesn’t fit their budget or suit their needs.
In today’s highly competitive real estate market, it’s all too common for buyers to rush into a deal that doesn’t fit their budget or suit their needs. Millennials, in particular, have the most regrets after buying a home, according to a new Bankrate survey.
Buyer’s regrets are even more of a factor in the pandemic, with sight-unseen offers and contingencies waived to win the bid. The survey highlights some of the most common regrets new homeowners have and which demographic groups are most likely to have them.
That desperation to land a home leads some buyers to settle for properties that aren’t quite right for them. Home buyer regrets broadly fell into two major categories: financial and physical.
In general, the survey found that the older the buyer, the less likely there were to be misgivings about their purchase after the fact. In all, 64% of millennial home buyers (ages 25-40) have some regrets about their purchase compared with just 33% of baby boomer buyers (ages 57-75).
Surprised by the costs of homeownership
By far the biggest regret among recent home buyers was not being prepared for maintenance and other costs associated with homeownership. More than 20% of millennial homeowners said they thought that the costs of homeownership were too high, and that number jumped to 26% among owners aged 25 to 31.
“It can cause a rude awakening if one fails to plan for inevitable expenses,” said Mark Hamrick, Bankrate’s senior economic analyst. “This is yet another reminder why making emergency savings a top priority is so important. Whether it is a roof repair stemming from age or storm damage, or the need to fix or replace heating, cooling or appliances, it isn’t a question whether such expenses arise, only when and how much they will cost.”
Angelica Olmsted, an agent with RE/MAX Professionals Cherry Creek in Denver, said she advises her clients to go back quarterly to their pre-closing inspection report, which can help new homeowners anticipate repairs.
“Most people pay a lot of attention to it the week they get the report and then put it in a file and never think about it again,” Olmsted said.
New homeowners should also know the age of major appliances and home systems such as HVAC, water heater, driveways and roofs, so they can budget for major replacement expenses.
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Mortgage rate remorse
Millennials were also the most likely to say that they didn’t get a good mortgage rate, or that they overpaid for property. For example, 12% of millennials said their rates were too high, and 13% said they agreed to a sale price that was more than it should have been.
Although mortgage rates are near historic lows, it’s still important to shop around for the best offer. Even a few basis points difference in interest can mean a savings (or extra cost) of thousands of dollars over the life of your loan.
The more you shop around, the more savings you rack up. According to a study that Freddie Mac conducted in 2018, borrowers who got five rate quotes saved $2,914 — on average — with 80% of those shoppers who got five quotes saving $2,089 to $3,904.
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The home itself
Millennials again were the most likely to be unhappy with their new home’s physical characteristics. According to the survey, 15% of respondents from that generation said they disliked their new property’s location. About 30% thought that the home was not the right size.
“Because the market is so competitive, you have less time to make a decision on a home-buying purchase than you do on a laptop at Best Buy,” Olmsted said. “You’ve already had, possibly, a couple of offers not accepted, you feel that pressure to make a decision and put an offer in.”
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In the Denver-area neighborhoods where she works, home showings may last as little as 15 minutes.
“That is an insane amount of time to have to look at a property, see if you can live there, see if you like the neighborhood, see if a house has all the features you’re interested in,” she said.
Best ways to avoid regret
Work with an agent who understands the market.
Be ready to make some concessions, but stick to your guns on must-haves.
Focus on whether a home is somewhere you’d be comfortable living, even if it’s not your dream property.
Make a budget and stick to it.
Don’t rush into a deal just because you’re frustrated.
Despite the frenzied market, home buyer regrets remain fairly constant. The disappointment trends today are similar to what they looked like a few years ago.
Survey methodology: Bankrate.com commissioned YouGov Plc to conduct the survey. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,653 adults, including 1,425 homeowners. Fieldwork was undertaken on April 21-23, 2021.