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Trulia Survey: 2 In 3 Homebuyers Would Use Aggressive Tactics, Including Bidding Above Asking Or Paying Seller’s Closing Costs

Trulia, Inc. (NYSE: TRLA), a leading online marketplace for home buyers, sellers, renters, and  real estate professionals, today released the results of its Summer 2013 American Dream Survey. The latest findings reveal how today’s competitive real estate market has impacted consumer sentiment toward homeownership and the desperate measures people are willing to use to buy a home. Harris Interactive conducted the online survey on behalf of Trulia among 2,029 U.S. adults, age 18 and over, between June 24 and 26, 2013.

Top House Hunting Worries: Rising Mortgage Rates and Home Prices

Prospective home buyers are feeling the pain of a booming real estate market. The top worry among Americans who plan to buy a home someday, if they were to buy a home in 2013, is that mortgage rates would rise further before they buy (41 percent), followed by rising home prices (37 percent). For consumers in the hottest markets – where asking home prices rose more than 15 percent year-over-year, such as Las Vegas and Oakland – buyers’ worries are even more intense for most of the concerns listed below.
Top House Hunting Worries   Overall   In hottest markets
Mortgage interest rates would rise before I buy   41%   45%
Home prices would rise before I buy   37%   42%
I would not find a home for sale that I like   36%   38%
I would not qualify for a mortgage   30%   25%
I would have to compete with many other buyers for the home I wanted   27%   33%

Note: only among respondents who plan to buy a home someday. Hottest markets are U.S. metros where prices increased more than 15% year-over-year in June 2013, according to the Trulia Price Monitor.
 

Worried Buyers Taking Desperate Measures to Buy a Home

Among Americans who would buy a home someday, 2 in 3 (66 percent) would use aggressive 1 tactics to buy a home, including bidding above asking, paying the seller’s closing costs, writing personal letters, or removing contingencies, to name a few. Households earning more than $100,000 a year are more likely to offer to pay the seller’s closing costs or bid above asking, whereas lower-income households making less than $50,000 a year are more likely to borrow money from family or friends to put down 20 percent or make an all-cash offer. Young adults – many of whom are likely to be first-time homebuyers – are especially aggressive in their house hunt, with 78 percent likely to do at least one of these tactics.
What Buyers Would Do To Get Their Dream Home   Overall   18-34 Year Olds
Offer to pay the seller's closing costs   25%   30%
Bid 1-5% over the home's asking price   25%   31%
Write a personal letter to the home's seller   17%   23%
Borrow enough money from family or friends to be able to make a 20% down payment   12%   19%
Bid 6-10% over the home's asking price   9%   12%
Remove all contingencies   8%   9%
Borrow enough money from family or friends to be able to make an all-cash offer   5%   8%
Bid more than 10% over the home's asking price   4%   7%
   

Dream of Homeownership Deflated, But Viewed As Solid Investment

Rising mortgage rates and home prices may be putting a dent in the American Dream of homeownership. Only 67 percent of Americans believe homeownership is part of their personal American Dream, compared to 72 percent 2 seven months ago. Moreover, consumers also appear to also be downsizing their dream homes. Among those who said owning a home is part of their American Dream, just 7 percent say their ideal home size would be 3,200 square feet or larger, down from 11 percent last year 3. Despite these deflated sentiments, the housing recovery seems to have renewed Americans’ faith in real estate as an investment. Over the past two years, the percentage of consumers who say owning a home is one of the best long-term investments they could make has increased from 47 percent 4 to 60 percent.

PRE-APPROVED QUOTES
  • “The rising cost of homeownership cuts both ways for consumer confidence,” said Jed Kolko, Trulia’s Chief Economist. “The combination of rising rates and rising prices has made owning 20 percent more expensive, leading people to downsize their housing dreams. But rising prices make housing look like a better financial bet, so a majority of Americans now think homeownership is one of the best investments they can make.”
  • “Although buying a home is still much cheaper than renting, it’s a stressful time to be a homebuyer,” said Jed Kolko, Trulia’s Chief Economist. “Consumers are worried that mortgage rates and prices will keep rising before they buy, and many are willing to fight over the limited number of homes for sale. Watch out if a Millennial wants the home you’re bidding on: they’re more willing than their parents’ generation to outbid, borrow, or make a personal plea to get the house they want.”

MULTIMEDIA
  • To read the full analysis of the survey result, click  here.
  • To download a chart illustrating what buyers would do to buy a home today, click here.

SURVEY METHODOLOGY

This survey was conducted online within the United States by Harris Interactive on behalf of Trulia from June 24-26, 2013 among 2,029 adults ages 18 and older. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated.

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