In the midst of the pandemic, the United States experienced a surge in homebuying, driven largely by millennials taking advantage of low-interest rates. However, many of these buyers are now facing buyer’s remorse as mortgage rates increase.
According to a 2023 American Homebuyer Report, over one-third of homebuyers surveyed expressed dissatisfaction with their buying experience, and even more found the process to be more difficult than expected. The fast-paced nature of the market during this period led to impulsive decisions and bidding wars, with some buyers even waiving standard practices like home inspections. Now, these homeowners are regretting their choices, with over three-fourths expressing regret, according to a survey by home insurance company Hippo.
One example is a couple in Greenville, S.C., who bought a townhome without considering the challenges of climbing three stories every day with a baby and a dog. This lack of future planning has left them suffering and miserable, but they are comforted by the fact that they secured a low-interest rate and are not losing equity.
With housing inventory still at historical lows in some areas and interest rates showing no signs of decreasing, many pandemic-era buyers are settling for what they have. Lisa Briganti, a realtor in Greenville, advises homeowners to prioritize their happiness and acknowledges the difficulty of convincing people to make a change. She notes that many people are staying in houses they don’t like because they believe housing costs will drop, despite evidence suggesting otherwise.
The majority of homebuyers between 2021 and 2022 were millennials, who took advantage of low-interest rates while working remotely. This surge in first-time buyers led to a decrease in housing opportunities for this segment in 2024. With limited housing inventory and climbing prices, purchasing a home is becoming increasingly out of reach for first-time buyers. The annual income needed for an average starter home has skyrocketed from $49,000 in 2020 to over $96,000 in 2023, with some estimates suggesting it has now reached $120,000 in 2024.
Despite some buyer’s remorse, the National Association of Realtors (NAR) found that a significant percentage of millennials are still happy with their purchases. According to the NAR’s 2023 Home Buyers and Sellers Generational Trends Report, 83 percent of younger millennials and 87 percent of older millennials are satisfied with their homes.
However, it is crucial for frustrated buyers to understand the current economic climate and the likelihood of it staying the same in the short term. Lisa Briganti advises her clients to let go of waiting for rates to come down and the housing market to crash because it is unlikely to happen. Instead, she encourages buyers to consider that housing costs are still rising and waiting will only result in paying more for the same house in the future. Refinancing is always an option if rates do decrease.
In conclusion, the pandemic era brought about a surge in homebuying driven by millennials, but many of these buyers are now experiencing buyer’s remorse as mortgage rates increase. The fast-paced nature of the market and impulsive decisions have left homeowners regretting their choices. Limited housing inventory and rising prices have made homeownership increasingly difficult for first-time buyers. Despite some regrets, a significant percentage of millennials are still satisfied with their purchases. It is important for frustrated buyers to understand the current economic climate and make decisions based on realistic expectations. Waiting for rates to come down or the housing market to crash is unlikely to happen, and housing costs will continue to rise.
