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new report from BMO Economics suggests that high mortgage rates are delaying purchase decisions, but younger buyers remain eager to trade renting for homeownership. Key findings include:
* Nearly 7 in 10 U.S. adults believe high mortgage rates are impacting their home purchase plans.
* More than a third of potential buyers surveyed by BMO said they would need mortgage rates to drop to around 3% or less before making a purchase.
* The idea of buying a starter home and upgrading later is losing appeal, with 58% of respondents viewing this strategy as outdated.
While many Americans aspire to own a home, affordability challenges and economic concerns are making it difficult for some to achieve their goal. However, BMO's chief U.S. economist Scott Anderson notes that economic conditions can change quickly, making it essential to start planning today.
The survey found that 67% of respondents said mortgage rates are affecting their buying decisions, with millennials and Gen Zers being the most affected (69%). The ideal mortgage rate varies among respondents, but nearly a quarter want rates to drop below 3%, while others prefer rates around 3% or near 4%.
Younger buyers may be more influenced by mortgage rates, but older buyers are more likely to hold out for ultra-low rates. Only 9% of Gen Zers wait for rates to fall below 3%, compared with 18% of millennials and higher percentages among other generations.
The report also found that buying a home is still part of the American Dream for some, but many find it tougher to navigate. Nearly half (49%) believe they "missed my moment to buy a home," and 57% are content to continue renting.
Although more Gen Zers ranked home prices as a barrier to ownership than other generations, they are also the most interested in buying a home. Views on a first-home purchase as a stepping stone to something bigger and better appear to be shifting, with 58% saying it "makes no sense" nowadays to invest in a starter home and upgrade later.
While more than half of respondents (56%) have no plans to buy a home in the near future, the next few years could see an uptick in sales. Aspiring homeowners tend to be younger, with over half of Gen Z (59%) and millennial (53%) respondents indicating they want to buy in the near future.
