2024 State of Homebuying Report
Opportunities, Challenges Await Investors
By Joseph Ticchione
A new generation has emerged, showing readiness and eagerness to buy despite the recently volatile housing market. Gen Z—born between 1997 and 2012—is eager and willing to purchase their first home, while being more tolerant of relatively higher interest rates than older generations.
However, data from ServiceLink’s 2024 State of Homebuying Report (SOHBR) shows Gen Z — and even their slightly older counterparts, Millennials, who are still making their move — are not looking for the typical starter home. They’re seeking a larger home with more space that features tech upgrades and amenities.
For investors, this all points to added competition when it’s time to buy, but also a growing opportunity to explore fix-and-flip projects.
In March, ServiceLink released its annual report, which features data from a survey of 1,519 individuals who either purchased or attempted to purchase a home in the last four years. The report provides year-over-year data that reflects generational trends among buyers, including desire to purchase, attitudes related to alternative paths and the role technology plays in the process. It is clear that there are evolving opportunities and challenges for investors in the current market.
Here is a look at what we found.
Competition to Buy
Despite the dramatic ups and downs of the housing market over the last four years, many still have a strong desire to purchase a home. Of those surveyed for the 2024 SOHBR, 47% of respondents said they plan to purchase a home this year. For the first time in the survey’s history, Gen Z rose to the top when it came to home purchasing plans. Sixty-three percent of Gen Z respondents said they want to buy this year. Millennials—born between 1981 and 1996 — were right behind, with 59% looking to purchase in 2024.
For investors, the market has been tough with the high cost of capital coupled with high interest rates. But as rates are likely to soften, the market may become more appealing. With a new generation looking to enter the market, there will be added competition, specifically from current renters who now want to buy. When asked if they planned to buy or continue renting in 2024, 69% of current renters said they plan to buy this year, along with 70% of those living rent-free, possibly with parents or family members. Add in the 34% of current homeowners who are looking for a home and tight housing stock, and competition could be fierce.
Fix and Flip Opportunity
While Gen Z and Millennials are ready to buy, they also have very specific desires. SOHBR findings indicate they want bigger homes that feature technology upgrades. Across responses from all generations, 43% said they want a larger home with more space, 35% said they want more room between their home and a neighbor and added yard space, and 30% said they want both recently updated kitchens and bathrooms and homes with technology upgrades.
On the opposite end, aside from financial constraints and high interest rates which respondents said was the biggest reason they abandoned the homebuying process in the past 12 months, the largest dealbreaker for those looking to buy this year is a home being too small. This could be an opportunity for investors to fix and flip, turning existing housing stock that could be on the back burner into a more desirable purchase that today’s youngest generations will jump at.
Investors also could take existing housing stock and make upgrades to convert the home into a more tech friendly space. Ask yourself: Can I add space to this home? Can I add technological upgrades that will make this home more valuable? If you can make the property special enough, there’s a lot of opportunity here.
Utilize Technology to Your Advantage
Technology in the mortgage space continues to grow and buyers are ready to take advantage.
SOHBR data indicates that 60% of those who purchased a home in the last four years utilized eSign technology, up from 48% in 2023. Also 50% applied for a mortgage online and 40% scheduled an appraisal or closing digitally.
For investors, technology can also be a great resource. Utilizing the latest technology can help lower costs and make investing easier, along with providing greater visibility into the process and market.
Finding the right partner is key. You want to work with an organization like ours that provides automated, lower cost services, which can increase efficiency and save you money.
Tightening in the auction space
Buyers who are striking out in the traditional market are increasingly looking at auction to purchase their primary residence. SOHBR data indicates the appeal for today’s buyers in the auction market is a potential cost savings, being able to bid on a home remotely, having a faster homebuying process and added transparency.
While just 33% of those surveyed in 2022 said they were willing to buy at auction, that number has continually rose, to 40% in 2023, and 54% in 2024. The younger generations — Gen Z and millennials — are the ones with the greatest interest (67% and 64%, respectively), and the majority want the property to serve as their primary residence.
For investors, this goes back to competition. There is a larger pool of people looking at this space, so, as ServiceLink’s Amy Daniel, senior vice president, previously pointed out, it’s even more vital to sharpen your pencils and make sure the property makes sense for you and to find that right fit in a partner.
Growing equity
With rising home prices, many homeowners have seen increased equity. Nineteen percent of SOHBR respondents this year reported having more than $200,000 in home equity and another 15% percent said they have more than $100,000 in home equity. In total, that’s 34% of all respondents who have at least $100,000 in home equity, up from 21% in 2023.
For investors, you’re likely seeing your equity in current properties soar as well. Now is a good time to evaluate your portfolio and determine if it would be advantageous to capture the equity appreciation and make it liquid again. There are buyers who know what they want, and they might be willing to pay to get it.
For larger investors, there also could be a growing opportunity to buy properties with the intent of renting them back to the owner, allowing them to tap into their growing equity and you to grow your portfolio.
