As first-time homebuyers prepare to dive into the housing market this year, three out of four prospective first-time homebuyers admit they’re overwhelmed by the process, according to TD Bank’s First-Time Homebuyer Pulse. Nevertheless, two-thirds (68%) believe it’s a good time to buy a home, and 52% are already actively searching home listings online.
TD Bank surveyed more than 850 millennials (age 23-38) planning to buy their first home in 2020 to uncover their feelings around the purchase process, the greatest influences on their home buying plans, and how their perceptions and behaviors are shaped by what they’ve observed in the housing market of the past and present.
Despite an intent to purchase in the next 12 months, many buyers have not taken steps to prepare financially. Just half (52%) said they have started saving for a down payment and 53% have reviewed their credit report. What’s more, 42% said they have established a budget for their home purchase, but only 30% have spoken with a mortgage lender.
“It continues to amaze me how many buyers begin their home search without first speaking with a mortgage lender,” said Rick Bechtel, Head of U.S. Residential Lending at TD Bank. “A knowledgeable loan officer will work hand-in-hand with a buyer to help them understand mortgage and homeownership costs and establish a realistic budget. To put the cart before the horse is to pursue a significant life decision with possibly incomplete or inaccurate information.”
When homebuyers are ready to start the financing process, 52% say they would prefer to start their mortgage application in person with a lender, while 34% prefer the online channel.
Despite Prime Purchase Market, Affordability Remains a Road Block
Although millennial buyers believe it’s a good time to buy, many feel priced out of the market. One in five (22%) said steep home prices in the neighborhood where they want to live has prevented them from purchasing a home to date, and a third (36%) of those respondents thought homes were overpriced. Furthermore, 17% of buyers said they have yet to buy a home because they enjoy renting in their current neighborhood, but can’t afford to buy there.
Buyers’ perceptions of the housing market are also shaped by their current living situations – whether at home with their parents (19%) or in rentals (78%). As many as 70% of buyers agreed their expectations for their first home are higher because of the amenities they have where they currently live, and a majority would prefer to delay the purchase of a home until they find the ideal place (84%).
Shockwaves from 2008 Housing Crisis Linger in Buyers’ Minds
Despite their relatively young age at the time of the housing crisis, many millennial buyers are acutely aware of its impact; 67% of respondents are familiar with the housing crisis, and among that group more than half (55%) said their family or a family they knew lost their home. Further, 47% said growing up during the crisis has made them more nervous to purchase a home, and 70% said they view the housing market as fragile.
As such, many millennial buyers indicated stability in their personal and professional lives is a prerequisite to buying a home. Buyers said they are worried about their job stability (51%) and the stability of their relationship with their significant other (35%) when thinking about the homebuying process. Looking outward, top worries included the state of the economy (57%) and potential changes in policies due to the 2020 election (47%).
Homebuyers Tap into Parental Support, Guidance
Parents are playing a large role in their children’s homebuying process, from doling out advice to providing temporary housing and financial support.
More than a third (37%) of buyers said they regularly ask their parents for advice about homebuying, and nearly half (49%) said their parents are chipping in by contributing to a down payment, closing costs, monthly payments or co-signing the loan. Notably, 85% of buyers who said their families lost their home during the 2008 housing crisis said they will receive financial help from their parents.
“The millennial cohort of homebuyers is unlike any other in history,” said Bechtel. “They grew up during the explosion of personal technology, the fall of the housing market and the renaissance of the rental market. And as our survey found, their expectations of homeownership are shaped by all of it.”
TD Bank announced several key changes to its Consumer Product leadership team. Matt Boss, previously Head of Credit Cards and Unsecured Lending (CCUL) at TD, has been named Head of Consumer Products, overseeing the Bank’s Consumer Product portfolios. This includes Credit Cards and Unsecured Lending, Checking, Deposit, and Payment Products, Residential Lending and the Bank’s CRA efforts. In this role, Boss will prioritize enriching the customer experience, incorporating new technology, and driving growth across each of the consumer product portfolios.
“Customers are the core of our business – and Matt is tenacious when it comes to delivering on the customer experience,” said Greg Braca, President and CEO, TD Bank. “His expertise in deepening the value of our products, improving capabilities and modernizing operations makes him incredibly well-suited for this role. We’re eager to put Matt’s talent to good use as we continue to evolve and grow our consumer businesses.”
Boss’s promotion follows marked success leading the Bank’s credit and unsecured lending businesses, where he oversaw operations, refined the strategic direction, and increased performance across the CCUL businesses. Boss joined TD Bank in 2017. Prior to TD, he served as managing director of products and marketing for Australia and New Zealand Banking Group Limited (ANZ), based in Australia.
Following Boss’s promotion, Jason Thacker, previously Head of Consumer Deposit and Payment Products (CDPP) at TD, will succeed Boss as head of CCUL. In this role, Thacker will oversee TD’s Bankcard, Retail Card Services, U.S. Partnerships and Unsecured Lending businesses. He brings deep industry knowledge to this role, having held a variety of leadership positions across TD since he joined the Bank in 2007.
With this change, Lindsay Sacknoff will replace Thacker as Head of CDPP. She most recently served as Head of U.S Contact Centers and has spent nearly ten years with TD Bank. During her tenure leading U.S. Contact Centers, Sacknoff focused on enhancing the customer and employee experience, and refining operations, with great success across both initiatives.
“These are critical, customer-focused roles and both Jason and Lindsay are leaders characterized by their commitment to deepening relationships with our customers,” said Boss. “We have a great opportunity to evolve, build, and grow, and I’m excited about the leaders we have at the helm across our consumer product teams.”
