Home Buyer Pessimism Reaches 10-Year High

by Maurie Backman | Updated July 19, 2021 - First published on May 15, 2021

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Home buyer sentiment has declined. And when we look into the state of the market, it's easy to see why.

Frustrating. Fruitless. Useless. These are some of the words you might hear if you ask today's home buyers to describe what the house-hunting process has been like.

Record-low inventory has made it extremely difficult for buyers to find homes within their budgets. And even homes that do seem to work on paper are difficult to come by when we consider that many of them are winding up subject to bidding wars. In fact, in today's market, stories keep emerging of buyers practically throwing extra money at sellers in an effort to get their offers accepted.

It's not surprising, then, that home buyer sentiment declined substantially in April. The percentage of people who think it's a good time to buy a home fell from 53% to 47% last month, as per the Fannie Mae Home Purchase Sentiment Index. At the same time, the percentage who think it's a bad time to buy rose from 40% to 48% between March and April. All told, this is the most pessimistic buyers have been in a decade.

Not shockingly, potential buyers with incomes between $50,000 and $100,000 were notably pessimistic. This likely stems from the fact that while housing inventory is low across the board, there's an even greater shortage on the low end of the market. This takes away from the number of affordable starter homes and moderately priced properties for buyers in that income range.

If you've been spinning your wheels trying to buy a home in today's tight market, you may be wondering whether it's time to call it quits. The answer? While you don't need to give up the idea of getting a mortgage and buying a home, you may want to put your search on pause for at least a month or two and give the market some time to open up.

Usually, housing inventory picks up significantly during the spring. This year, however, is proving to be an exception, and buyers aren't enjoying the normal spring boom. We can largely blame the pandemic for that one. Between safety concerns and lingering economic uncertainty, many sellers are hesitant to list their homes at a time like this.

But hopefully, things will improve with regard to both the pandemic and the economy. And once that happens, housing inventory could open up in a very big way.

Now that may not happen this year, but it could. So by putting your home search on hold for just a few months, you might spare yourself some needless stress, all the while socking away even more money for a down payment so you can pounce when that influx of inventory eventually hits.

Now you may be thinking -- what about mortgage rates? It's true that they're competitive right now, and you may be worried you'll miss out on them if you don't buy a home very soon. But while rates could climb a little, they're unlikely to jump significantly during the latter part of 2021. Remember, too, that today's rates are extremely competitive on a historical basis -- so there's a lot of room for them to climb while still being attractive.

The fact that home buyer pessimism is up makes a lot of sense given today's market conditions. If you'd rather not subject yourself to even more frustration, taking a break from your home search could allow you to recharge, save more, and put yourself in an even stronger position to buy once inventory eventually opens up.

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