February 28, 2023, WILMINGTON, Del. /Realty Wire/ Greater Philadelphia and Delaware region residents have mixed feelings about their ability to find, finance and afford a new home in the current economic climate, a new WSFS Mortgage Study found, with more than one-quarter (28%) discouraged from searching altogether, potentially providing more options for the one-third who do plan to look for a home.
The study, which surveyed 1,032 Greater Philadelphia and Delaware region consumers and 1,000 consumers nationally, examines the economic impacts of inflation, interest rates and competitive outlook for homebuyers, homeowners and renters ages 25-65.
Mixed Feelings and Plans
Discouraged homebuyers cite home prices (65% regionally/68% nationally), mortgage rates (57%/53%), and recession concerns (41%/42%) as reasons to hold off on their home search this year, with a potential recession even more concerning to minorities in the region, as 47% say it is discouraging them from buying a home. More than half of all regional homebuyers (55%) are also pessimistic about affording a down payment and/or closing costs as well as the monthly mortgage payment (51%) if they were to buy now. Negativity toward affording a monthly payment runs even deeper nationally, with six in 10 (61%) citing it as their top concern.
However, of those who are likely to search for or buy a new home this year, four in 10 (42% regionally/44% nationally) believe there are available homes they want and 37% in the region and nationally expect mortgage interest rates to decrease.
“These are important factors to consider for homebuyers who were previously shut out of the homebuying market due to historic levels of demand driven by low rates and people’s desire for more space during and after the pandemic,” said Jeffrey M. Ruben, President of WSFS Mortgage. “While we aren’t going to see mortgage rates at those levels anytime soon, there are several indicators that rates will stabilize. Those who continued saving toward a home despite their previous frustrations may be rewarded this year as they face less competition for the homes they want.”
Inflation Suppressing the Market
Two thirds (66%) of regional residents say that higher everyday prices are making it harder for them to save for a new home or rental. Rent payments also make saving difficult, as three in five regional renters (60%) say they have difficulty saving to buy a home with current rent payments. Inflationary prices are further contributing to rent and mortgage payment struggles, with 54% of regional residents saying that high prices impact their ability to keep up with rent or mortgage payments.
Using Their Equity
The plans of current homeowners are also mixed. More than half of regional homeowners (55%) plan to use the home equity they’ve built up, with 32% planning to use it within the next year. Of those who plan to use their home equity, more than one-third (36%) plan to use it to renovate or remodel their home, 35% plan to use it to purchase another home, and one-quarter (26%) plan to use their home equity to pay off non-mortgage debts.
Minority homeowners (63%) are more inclined to use their equity than white homeowners (51%), and men overall far outpace women (69% versus 45%) in planning to use home equity as well. Minority (39%) and white homeowners (32%) both cite buying a new home as a top reason to use their equity, along with a renovation or remodel (34% minority/38% white).
Looking for Clarity and Help
When asked to choose what they want from a mortgage lender, nearly half (44%) of regional residents selected lower service fees as their top priority, with transparency on all-in purchase cost (41%), homebuyer assistance programs (39%) and a quick and easy pre-approval process (37%) also ranking high.
Men are more likely to value transparency on purchase costs when buying a home, with 48% of men versus 38% of women saying they want transparency most from a mortgage lender.
Awareness of homebuyer assistance programs varies, however, potentially highlighting gaps among different populations. Forty-five percent of minorities report having considered homebuyer assistance compared to 26% of white buyers, with more men (44%) than women (29%) considering these programs and 14% of women having never heard of homebuyer assistance compared to 7% of men.
“While there are many local, state and federal programs designed to help homebuyers achieve this dream, coming up with upfront costs, such as down payment and closing expenses, can be challenging,” said Ruben. “While it is important for homebuyers to do their research, it is equally, if not more, important that their lender work closely with them to identify programs their clients may be eligible for. Knowledge truly is power in homebuying, and so is having the right lender and realtor advising you on these funding options and others, like the WSFS Bank Down Payment and Neighborhood Opportunity programs, to provide access to money and better home affordability.”
The study was conducted by research company Opinium. The sample includes 1,000 national respondents and 1,032 in the Greater Philadelphia and Delaware region who reside in five southeastern Pennsylvania counties (Bucks, Chester, Delaware, Montgomery and Philadelphia), four southern New Jersey counties (Atlantic, Burlington, Camden and Gloucester), and all three Delaware counties (Kent, Sussex and New Castle). All respondents were between the ages of 25 and 65. The online survey was conducted from February 1-8, 2023, with a combined regional and national margin of error of +/- 3.1 percent.
About Opinium, Inc.
Founded in 2007 Opinium is an award-winning strategic insight agency built on the belief that in a world of uncertainty and complexity, success depends on the ability to stay on the pulse of what people think, feel and do. Creative and inquisitive, the Opinium team is passionate about empowering clients to make the decisions that matter. Opinium works with organizations to define and overcome strategic challenges – helping them to get to grips with the world in which their brands operate. It uses the right approach and methodology to deliver robust insights, strategic counsel, and targeted recommendations that generate change and positive outcomes.
About WSFS Financial Corporation
WSFS Financial Corporation is a multibillion-dollar financial services company. Its primary subsidiary, WSFS Bank, is the oldest and largest locally headquartered bank and trust company in the Greater Philadelphia and Delaware region. As of December 31, 2022, WSFS Financial Corporation had $19.9 billion in assets on its balance sheet and $64.5 billion in assets under management and administration. WSFS operates from 119 offices, 92 of which are banking offices, located in Pennsylvania (61), Delaware (39), New Jersey (17), Virginia (1) and Nevada (1) and provides comprehensive financial services including commercial banking, retail banking, cash management and trust and wealth management. Other subsidiaries or divisions include Arrow Land Transfer, Bryn Mawr Capital Management, LLC, Bryn Mawr Trust®, The Bryn Mawr Trust Company of Delaware, Cash Connect®, NewLane Finance®, Powdermill® Financial Solutions, WSFS Institutional Services®, WSFS Mortgage®, and WSFS Wealth® Investments. Serving the Greater Delaware Valley since 1832, WSFS Bank is one of the ten oldest banks in the United States continuously operating under the same name. For more information, please visit www.wsfsbank.com.
Media: Eric Springer