Why are young people still willing to buy their first home in the current market?

Homebuyers in their 40s and younger are still planning to buy homes, even though most believe the market favors homesellers, according to a Bank of America 2023 Homebuyer Insights Report.

More than half of homebuyers surveyed (55%) believe the market is more competitive this year than last, yet 62% of Gen Z and 55% of millennial prospective homebuyers said they are moving ahead with plans to purchase. 

“The market is less frenzied as rates have moderated, and that may be impacting perception,” Matt Vernon, head of retail lending at Bank of America, said in a news release. “And low inventory is still creating a highly competitive environment. Homebuyers are doing the right thing by taking time to understand the market, weigh their priorities and determine what fits into their budgets.”

Nearly half (47%) of all prospective buyers said they would buy a home in the current housing market because they are tired of renting and rent increases.

Prospective buyers said they would be willing to pay up to 25% of their monthly income toward mortgage payments for a starter home and 30% for a forever home, the report said. About 55% of prospective buyers plan to purchase a home with a spouse or partner, while 38% said they’re planning to buy solo.