First-time buyers face challenges head-on
How first-time buyers are adapting in the changing market
KM
Kerry Melcher
11/7/2022 · 7 min read
A year after the frenzied market of 2021, first-time home buyers continue to grapple with bidding wars, fleeting listings, unexpected costs, and more demands on their time. But as we’ve seen throughout the pandemic, real estate resilience remains – even for those battle-scarred veterans of bidding wars. And even despite all the time, emotional energy and overall effort it takes, the dream of home ownership hasn’t waned for buyers already in the game as well as newcomers.
What’s behind this strong desire to own, and how has the experience changed over the last year? We partnered with Wakefield Research to reveal some of the pain points for first-time buyers, how they adapted to a chaotic market, and whether they have any regrets.
First-time house hunting
On par with last year, first-time home shoppers were aggressive in their searches. The average first-time home buyer toured a daunting 24 homes in person or virtually; that was up from 15 in 2021. But some first-timers were more selective: where in 2021 17% of buyers toured fewer than five homes, this year 25% did.
After they chose their favorite, buyers felt a sense of urgency in making an offer, hoping theirs would be the winning bid. Half of first-time buyers said they made offers on five or more homes before winning one; respondents averaged 12 offers apiece, up from 10 in 2021.
Is the desire to own so strong that first-time buyers are settling for a property that’s not “the one”? Some first-timers admitted putting their personal tastes aside and bidding on a home that they didn’t strongly desire. In fact, nearly 2 in 3 (63%) admitted to bidding for a home they didn’t really want: 70% of parents, and 43% of first-time buyers said they bid on several homes that didn’t appeal. This was especially true of Millennials, 20% of whom made offers more than five times on houses they didn’t want. This may seem odd, but it does reflect a sense of urgency based on a flurry of competition and pre-inflationary low mortgage rates.
Even so, once buyers have made a deal, satisfaction is high. Nearly 7 in 10 (69%) say they are confident they found the best home for them in the market, including 92% of Boomers and 72% of Millennials. Of all the adult age groups, Gen Z buyers were the least satisfied, with just over half (54%) saying they found the best home.
Home, oh home, where art thou?
Keeping up in a competitive housing market means checking, and re-checking, listings. More than two in five first-time buyers (41%) say they checked listings several times a day in an average week, up dramatically from the 25% who were searching for homes last year. Those who purchased a home between mid-August and mid-September 2022 checked home listings on average 12 times a day—nearly twice as often as those who bought within the previous 6-12 months.
The tendency to check listings frequently every day differed somewhat by region. First-time buyers in the Northeast (52%) were likely to check listings more often than those in the Midwest (43%), South (40%), and West (30%). On average, the number of times homeowners checked listings in a single day was eight, up from seven in 2021. Millennials checked listings most often: nine times a day on average.
Often, home shopping can feel like a second job. Beyond checking for listings, there are home tours, meetings with your realtor and financier, and other tasks. In the past year, 65% of respondents said they missed work due to the buying process. Those who lost office time missed an average of 15 hours – nearly two full workdays, which is up one hour of workday time out from 2021.
It’s time for a break
All that’s required in the buying process turned some prospective buyers off: 58% said the home search was “much more time-consuming than expected,” and a vast majority (89%) of first-time buyers said they had previously put off buying a home altogether. Taking a break from home searching can sometimes feel like a defeat, especially when you’re facing economic headwinds. Of those who put it on the back burner, nearly half (49%) cited financial reasons, which included not being financially prepared overall (38%), and not having saved enough for a down payment (25%).
With finances tight, many respondents looked to partners, families, friends, and even strangers to help with the purchase of their first home:
Homeownership desires
Beyond finances, other factors such as COVID-19 (29%) and a wild housing market (27%) spurred some buyers to put their purchases on hold. But despite these uncertainties, motivation for home ownership remained strong this year.
Half of first-time home buyers said “family” is the top reason they decided to purchase. Space is also an important consideration: nearly half (45%) of first-time buyers purchased their home because they needed more space, particularly parents. For others, the decision to buy is rooted in spending: 45% cited having more peace of mind when owning instead of renting, and another 40% believe that home ownership is a smart investment.
Lessons learned
Of all the challenges people have faced in 2022, 43% of buyers said finding a home that best suits their needs was the toughest challenge. While nearly 70% said they did find the best home for them, frustration remains about the actual home-buying process. This includes the stress of waiting on an offer (41%), coming up with enough for a down payment (36%), and being outbid by others (34%).
In 2022, 90% of first-time home buyers said they found ways to save money on fees involved in the process. About half (49%) reported doing their own research, asked more questions about fees (37%), and negotiated fees in the process (36%).
Along the way, nearly all (94%) first-time home buyers say they have experienced a few revelations. While many see the listing price for a home and plan accordingly, unexpected expenses such as closing costs or taxes (38%), home upkeep (34%), unexpected repairs (34%), and the impact on monthly budgeting (32%) are some of the biggest surprises about home ownership. These sorts of unexpected costs caught many single first-time buyers off guard (44%), as well as those earning less than $50,000 a year (44%).
Is it worth it? First-timers say ‘Yes’
Today’s first-time home buyers feel that the time and energy invested in their house-hunting process paid off. Buying your first home can be time-consuming, so approaching it with the right mindset can help you feel excited about it too. Remember that buying a home is a romance. Have patience and embrace each step of the process while you’re searching for “the one.” Your perfect home could be right around the next corner.
Are you searching right now? Download the Opendoor app to learn how we can help you find the home of your dreams.
Methodology
The Opendoor Survey was conducted by Wakefield Research among 1,000 nationally representative U.S. first-time homebuyers, between September 20-October 2, 2022, using an email invitation and an online survey. “Homebuyers” are defined as those who purchased their first home in the past 12 months. Data has been weighted.
The results of any sample are subject to sampling variation. The magnitude of the variation is measurable and is affected by the number of interviews and the level of the percentages expressing the results. For the interviews conducted in this particular study, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 3.1 percentage points from the result that would be obtained if interviews had been conducted with all persons in the universe represented by the sample.
Further reading
Opendoor launches Buy + Sell in San Diego
New leadership structure
First-time buyers face challenges head-on
Introducing Opendoor Exclusives
Our new marketplace, Opendoor Exclusives
Opendoor third quarter of 2022 financial results
A message from our CEO and Co-Founder, Eric Wu
Holiday decorating tips—according to a designer
We’re heading to Charleston and Richmond!
The Opendoor Finance app expands
Navigating changing market conditions
De-stressing homeownership
Introducing our new CTO Raji Subramanian
Here are Opendoor’s top family-friendly cities
Opendoor second quarter of 2022 financial results
Zillow, Opendoor announce multi-year partnership
Home appraisal tips – and what is home appraisal based on
Welcoming Sydney Schaub as Chief Legal Officer
Be Open: Our new brand campaign
How to write an offer letter for a house
8 top home selling mistakes you should avoid
Should I sell my house? 6 questions to ask before you sell
How to sell your house for the most money
Opendoor partners with Lower.com
Open house tips for first-time buyers
The paint colors that can boost your home’s value
Who pays real estate agent commission fees
Sunny skies ahead: Opendoor’s hottest neighborhoods
Opendoor is now live in 50+ markets
The most important things to repair before selling a house
8 critical factors that influence a home’s value
What you need to know about preliminary reports
Introducing a new Opendoor financing app
The Millennial desire for homeownership
Opendoor’s First Quarter of 2022 Financial Results
Opendoor launches in Detroit area and Southwest Florida
What is a cash offer in real estate and why consider it?
The new normal: 2022 Real Estate Trends Report
3+ things I learned at Girl Geek 2022
Opendoor is now live In New Jersey & New York
Opendoor report: Journey of a New Build Buyer
Q&A: Jessie Smith, General Manager, Northern CA
Honey, I shrunk the house!
Opendoor announces Fourth Quarter and Full Year 2021 Financial Results
Feels like home: Opendoor live in the SF Bay Area
Home inspection checklist for buyers
New report: These design trends will reign supreme in 2022
Coast-to-coast: Opendoor’s hottest neighborhoods in the U.S.
Where to next? Opendoor’s most popular zip codes
Welcome home: How you moved with Opendoor in 2021
Q&A: Franklin Muanankese, General Manager, Atlanta
2021 in review: Empowering customers through innovation
Opendoor announces Third Quarter 2021 Financial Results
Welcome home, RedDoor!
Introducing Opendoor Complete: sell, buy and close seamlessly
Opendoor announces hiring plans in Canada
U.S. first-time homebuyers missed billions in work time house hunting
Opendoor launches real-time offers on Realtor.com
Welcoming Amelia Generalis as Chief People Officer
Q&A: Patrick Halligan, General Manager, D.C. area
Opendoor partners with BDX’s NewHomeSource.com
Opendoor expands to D.C., Cleveland & Columbus Areas
Welcoming Skylight & Pro.com to the Opendoor family
Sandy beaches to rolling vineyards – Opendoor’s most popular CA markets
Introducing the most convenient, fastest way to complete your home assessment
Reaching a new milestone: Meet the Petitto family!
Check in with VP of Engineering, Mark Kinsella: One year after joining Opendoor
Opendoor announces Second Quarter 2021 Financial Results
What’s better than a competitive cash offer? Building your brand with Opendoor
How real estate agent saved the sale with Opendoor
Opendoor data reveals what consumers think about today’s real estate market
Opendoor 2021 report: Achieving the American dream
Opendoor now available in more than 40 markets
Introducing Opendoor Agent Access
Open Book: Gillian Tay, Sr. Engineering Manager
Opendoor 2021 report: The hearts & minds behind today’s housing market
Opendoor reaches 100K customer transactions & launches 6 new markets
Open Book: GeLisa Beard, Sr. Pricing Analyst
Opendoor expands to Kansas City, Colorado Springs & Northern Colorado
Opendoor announces First Quarter 2021 Financial Results
Tales from the market: Where people are moving
Q&A with Mike Cieri: Opendoor’s VP of Buyer Product
Opendoor to report First Quarter 2021 Financial Results on May 11, 2021
Opendoor now available in 30 markets; first to bring iBuying to St. Louis
Opendoor increases buying capabilities to empower more sellers
How this retired service member sold his home to Opendoor
Open Book: Sherry Wang, Data Science Manager
Meet Shannon Hodges: Opendoor’s New VP of Sales & Support
Opendoor announces two executive promotions
Welcome John Rice to Opendoor
Opendoor brings iBuying to Boise; launches in 4 new markets
2021 Local Real Estate Trend Report
Opendoor Announces Fourth Quarter and Full Year 2020 Results
Opendoor introduces cash-backed offers, increasing buyers’ chances of winning their dream home
Expanding our footprint to San Diego and Asheville
Open Book: Ben Jenkins, Experience Partner
2021 Real Estate Trend Report: Moving into Modernity
Opendoor Technologies Inc. Announces Upsize and Pricing of its Follow-On Public Offering of Common Stock
Open Book: Alisha Thurston, Director of Mortgage Ops
Opendoor Technologies Inc. Announces Proposed Public Offering of Common Stock
KM