Owning a home is one of the major milestones of adult life, and it’s still one of the safest and most lucrative ways to build wealth. So why do so many homeowners regret buying their home? Buyer’s remorse may seem uncommon, but a new study by Clever Real Estate reveals that it’s far more widespread than anyone suspected.
How many remorseful buyers are there?
The study found that 60% of home buyers feel at least some remorse. Even more troubling is that 25% said they feel buyer’s remorse often. Buyers who bought during the pandemic feel buyer’s remorse even more frequently. Among pandemic buyers, 39% reported that they feel buyer’s remorse often.
The problem isn’t restricted to pandemic buyers, though. The level of buyer’s remorse among all homeowners has risen dramatically. In Clever’s 2019 study, 20% of homeowners reported that they often feel buyer’s remorse. In 2022, that percentage more than doubled to 45%.
Part of the problem may be that buyers had to rush into a purchase without learning the steps for buying a home. Given their regret, some homeowners may put their home back on the market or sell to a company that buys houses for cash.
What’s causing discontent?
Among remorseful buyers, the most commonly cited reason (39%) for regret was expensive home maintenance costs. The average homeowner spends $3,000 a year on home maintenance — on top of mortgage payments, property taxes, homeowner’s insurance and life insurance.
One-third of all homeowners spent $5,000 on home maintenance in 2021. The study found that millennials (42%) were almost three times more likely than boomers (15%) to spend more than that amount on maintenance. Reasons for the disparity are unclear, but in a tight market, millennials are more willing to find and buy distressed properties that need a lot more work or invest in wholesale real estate.
The surprisingly high costs of homeownership
Home maintenance is just the tip of the iceberg. More than half (52%) of homeowners say the overall cost of owning a home took them by surprise. Average homeowners spend more than $15,000 a year on their homes, according to the Clever study. They spend:
- About $3,000 in home maintenance
- About $5,000 in utilities
- About $3,300 in home improvements
- More than $2,500 in property taxes
- About $1,700 in homeowner’s insurance
These costs are escalating fast. Since the 2019 study, they’ve increased by more than $2,000.
A fundamental cash flow problem
Financial experts recommend spending no more than 30% of gross household income on housing, but the survey found that 45% of homeowners spend more than that. Some financially stressed homeowners spend more than 40% of their gross income on housing. In 2019, only 16% of homeowners fell into that category, while 29% did in 2022 — suggesting pandemic buyers may have overextended their finances.
Many homeowners can’t cover a $5,000 emergency repair
More than half of homeowners surveyed (57%) say they’d have to borrow money to cover a $5,000 emergency repair. One in five homeowners say they don’t have $1,000 on hand, and 1 in 7 have less than $500. With less than $500 in savings, there’s very little margin for error. A layoff or unexpected medical bill could lead to a missed mortgage payment or foreclosure.
Transition from renter to homeowner
One major cost increase for former renters is utilities. Most homes are a lot larger than an apartment. Heating and cooling the extra square footage is naturally going to cost more. The average homeowner pays $4,829 a year in utilities, while the average renter pays a little less than half that, $2,866. Many homeowners may understand that their mortgage payment will be more than their rent, but they may not be prepared for utility costs to double.
How seriously should agents take buyer’s remorse?
Three-quarters of homeowners say that owning a home is a hassle, and 1 in 8 say the benefits of owning a home aren’t worth the convenience. Although most homeowners have legitimate complaints about rising costs, unforeseen expenses, and razor-thin margins, 52% still say homeownership is a good investment and can meet many of their needs. That’s a message agents should send to prospective home buyers and better prepare them for the costs they’ll be taking on as homeowners.
This column does not necessarily reflect the opinion of RealTrends’ editorial department and its owners.
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