Nearly 3 in 4 Americans cite inflation or high interest rates as the main reason they don't plan to buy a home in 2023, according to a new study. Due to the currently high rate of inflation, home prices and daily expenses are a top concern for many Americans.
The survey conducted by Real Estate Witch asked one thousand Americans how the pandemic has affected their finances over the last three years. Results show that 72% of Americans still have not recovered financially from the COVID-19 pandemic and that 49% consider the pandemic a leading cause of the historic inflation the U.S. is currently experiencing.
Impact on Personal Finances
With the inflation rate currently hovering around 6%, Americans' personal finances are being stretched to their limits, spending more at the pump and on everyday commodities. Over the last year, food prices have increased by 9.9%, with the cost of eggs increasing by a whopping 60% year over year.
Due to the higher living costs, Americans are taking on more and more debt. According to the survey, 75% of Americans have non-mortgage debt, and of those, 73% are stressed about their current financial situation.
The stress everyday folks face is primarily because they have little to no wiggle room when it comes to expenses. The survey discovered that 45% of Americans have no emergency savings at all, and 38% believe they will run out of savings in 2023.
Despite many Americans taking on multiple jobs to make ends meet, 44% of respondents said they are currently living paycheck to paycheck. While that number has fallen from 73% during the height of the pandemic, it still illustrates the financial strain many Americans face.
Impact on the Housing Market
The volatile housing market continues to be a significant concern for many Americans. Three years into the pandemic, Americans are 60% more pessimistic about the housing market than they were a year ago, with only 28% saying now is a good time to buy a home, compared to 44% in March 2022 and 69% in April 2021.
The outlook on home buying trends in 2023 shows that most Americans (69%) cannot afford a home right now, and nearly half believe they'll never be able to afford one.
However, the grass isn't always greener on the other side. Renters are 10% more likely than homeowners to say they are financially worse off than before the pandemic. 69% of renters believe they can't afford a home in 2023.
Traditionally, renters have been able to save money on monthly expenses and, in turn, use those savings to eventually purchase a home. However, rent prices have skyrocketed recently, especially in larger cities, making it increasingly difficult to rent and save simultaneously.
Participants in the survey echoed this sentiment, with 42% of renters saying they don't have enough saved for a down payment on a house, while 29% didn't feel that they would qualify for a mortgage.
As for Americans looking to sell their current homes, 15% have delayed their plans indefinitely due to the pandemic. Eleven percent of homeowners say they plan to sell their homes in 2023, regardless of inflation. Nine percent even say inflation is causing them to accelerate those plans.
When these sellers decide to list their homes, they intend to purchase something more affordable. Some 22% of potential sellers said they are moving to seek a lower cost of living.
Overall, Americans seek a lower cost of living in all aspects of their lives. Three-fourths of Americans named a lower cost of living as the solution that would help them the most financially.
Outlook for 2023 and Beyond
According to experts, the American public should experience some relief in 2023.
Supply chain disruptions, amongst other things, were a driving force behind inflation in 2021 and 2022, thanks to the impact of the global Covid-19 pandemic. Many of these constraints have resolved themselves as the global economy slowly got back on track in 2022, says Shawn Snyder, head of Investment Strategy at Citi U.S. Wealth Management.
Despite this steady improvement, Americans are still a bit wary when it comes to their personal outlook. Only 37% of respondents think the economy would return to its pre-pandemic health. At the same time, 30% feel that the economy could worsen in 2023, mainly due to the possibility of new COVID-19 variants or new pandemics.
Although 58% of Americans believe we've made it through the worst of the COVID-19 pandemic, the past three years have shown us that American households must always be prepared for new challenges.
The pandemic has made average Americans feel skittish when buying into the possibility of a robust economic recovery. Time will tell if the bounce-back will ease uncertainty and impact average Americans' personal finances or home-owning aspirations.
This article was produced by Real Estate Witch and syndicated by Wealth of Geeks.
source https://wealthofgeeks.com/inflation-and-home-ownership/
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