Home Buyers Are Blowing Their Budgets
April 4, 2018
A recent survey found that buyers are spending more on their home purchase than they intended. A third of homeowners recently surveyed say that they blew through the upper limit of their home purchase budget by an average of $16,510, according to a new survey released by Owners.com of 1,214 Americans who purchased a home in the last four years.
A big part of the problem is the increasing costs of buying, particularly for starter homes. “Clearly, we’re in an environment of rising prices,” Daniel Maloney, national head of sales for real estate brokerage Owners.com, told USA Today.
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Millennials are the most likely to overspend on their home purchase. Maloney says that is because they tend to be first-time home buyers and the least knowledgeable about setting a realistic price target that they can meet. Here's how much the different age groups tended to overspend on their home purchases:
- 40% of millennials went over budget by an average of $24,545;
- 34% of Generation X members went over budget by an average of $13,996;
- 19% of baby boomers went over budget by an average of $8,024
The Owners.com survey also found that Generation X members tend to be the most self-directed when purchasing a home, while millennials tend to be the most reliant on their real estate agents for direction. Nearly one in five of millennials—or 19 percent of those surveyed—admitted they can be indecisive at times and rely on their agent to tell them what they should be considering and touring.
Source: Owners.com and “Hot Housing Market: Home Buyers Are Spending More Than Expected,” USA Today (April 3, 2018)
Updated: October 15, 2019