More than one in three Americans are holding off on buying a house in 2023 to prepare for a potential recession, according to a new survey from Assurance.
The insurance company polled 3,200 people about their plans in anticipation of a recession in 2023. And while 31% of respondents said that buying a house is their dream post-recession purchase, 35% are putting off a purchase in the event of an economic downturn. This share rises when it comes to millennials as 43% of this generation are holding back on homeownership in case the economy goes south.
Many Americans are also putting upgrades to their current homes on hold, with 38% of all respondents (including 46% of baby boomers) delaying home renovations. People are also less eager to redecorate, with 42% saying they’ll hold off on buying furniture and other home furnishings.
Younger respondents are also waiting to start a family in light of the tumultuous economy, with 21% of all survey participants (including 24% of millennials) planning to delay having a child because of recessionary concerns.
Interestingly, only 2% of Americans said that higher mortgage rates scare them most about a potential recession — but 53% said the increased cost of home listings does.
Overall, the majority of Americans aren’t taking a potential recession lightly. Sixty percent of those polled by Assurance are taking the threat of a recession this year seriously, with 56% claiming that they started saving when the possibility of a recession grew last year. Many Americans, however, are still nursing concerns, with 43% of respondents saying they feel financially ill-prepared if the nation were to fall into a recession in 2023.
Assurance’s findings underscore the pressures already being felt by mortgage lenders and other industry professionals this year, with many homeowners citing market conditions as reasons for restraint. It’s a reason that Scott Agnew, operating principal at Keller Williams Realty, affirmed the importance of having frank conversations with potential borrowers regarding the ebbs and flows of the market in a recent article in Scotsman Guide Residential Edition.
“Remember that homeowners create wealth in two ways,” he wrote. “The first is by purchasing a property and paying down the liability on the asset. The second is to watch the value of the property rise over time. Both ways create equity for the homeowner.
“Clients often look at buying and selling with the idea of timing the market. Yes, this does happen. But a smarter move is to buy without factoring in short-term hindrances such as rates and costs. Over the long haul, it will be better for borrowers if they jump into an industry that has proven itself over the past 50 years to have a natural flow of increased appreciation and tax benefits.”
Mortgage professionals need to step up to provide guidance during turbulent parts of the cycle.
“Even though there are momentary shifts or corrections in a market, it does not mean that the larger economic forces of society are going to be greatly altered,” Agnew wrote.