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Buying a home is one of the largest financial commitments anyone makes of the course of their lives. As such, it’s one of those momentous occasions that also brings with it significant emotional stress.
Let’s be honest. Home ownership has long viewed as integral to the “American Dream” as well as being one of the primary wealth-building endeavors anyone can pursue. Those advantages also bring great responsibility and burdens. In keeping with the theme of honesty, buying a home is expensive and exhausting. Those and related stress linger today.
High interest rates and steadily appreciating residential real estate values are preventing many prospective buyers, particularly in younger generations, from becoming homeowners. That’s problematic on any number of levels, not the least of which is the point that even younger prospective buyers have likely heard from their parents and other sources of influence that home ownership is a form of validation and pivotal to financial success.
While advisors aren’t therapists, they can enhance client relationships by better understanding some of the emotional burdens associated with home buying. Now is as good of a time as any for those conversation because data confirm that clients are worried about buying homes.
Lots Home Buying Stress
Bank of America’s recently released Homebuyer Insights Report (HBIR) confirms there’s high levels of stress related to home ownership. For example, 72% of those queried believe consistent rent hikes will weigh on their long-term finances while 70% worry that by not owning a home, they’re harming their long-term financial outlooks.
Those are compelling reasons for advisors to discuss with clients strategies to effectively position for home ownership while perhaps addressing the issue of “too much house.”
“Today, 57% of respondents are unsure whether it’s a good time to buy, compared to 48% at this time last year. This trend is even more prevalent among first-time homebuyers, as 62% shared they’re unsure what to do,” according to Bank of America.
However, there are some instances in which renting can be the preferred option. Clients that in supposedly desirable areas with acute housing shortages – advisors know about such regions – may be better served renting for the time being because housing demand is outstripping supply in those areas or because essentially no new supply is being added.
“Against this background, while 37% of respondents in the HBIR say renting is the better choice right now, they still plan to take steps towards buying a home in the near future. Among prospective buyers, 81% said that renting is temporary and suits their current stage in life, and 76% are planning to buy a home within the next five years,” adds Bank of America.
Understanding the Mental Aspect of Home Ownership
There are clear psychological elements to home ownership and working on the premise that advisors aren’t psychologists, advisors shouldn’t “get in the heads” of clients, but they understand why some clients are so ardent in their pursuit of owning a house.
For example, nearly 90% of those polled by Bank of America believe there’s more emotional fulfillment than stress in owning a home. There’s more.
“67% of prospective homebuyers would prefer to own a home for the sense of permanence and emotional stability it provides, rather than the flexibility of renting,” according to the survey. “58% of prospective homebuyers said that owning a home is the best long-term decision for them to have control over their own living space.”