By Sam Wasson
Updated Nov 30, 2022
It has been a turbulent time for would-be homeowners. Factors brought about by the pandemic and following quarantine have led to a tightening housing market. From record-breaking inflation to rising interest rates, fluctuating home prices, and rising mortgage rates, purchasing a home can feel like an uphill battle.
While the market has made acquiring a home difficult for many, it presents a unique challenge for military service members. On top of all the traditional obstacles associated with home buying, service members must also face frequent relocations due to deployment. The constant need to transition to new regions creates an additional, considerable financial burden.
With all the hurdles standing in the way of homeownership, it’s easy to see why market perception would be at an all-time low. However, according to our most recent survey, this isn’t the case. We reached out to 550 service members to get their views on the current market and how hopeful they are for future homeownership.
When service members were asked whether their ability to purchase a home was better now as compared to 2021, 46% said yes. While this may initially come as a surprise, housing prices right now are not that much higher than they were this time last year. According to The U.S. Census Bureau and the U.S. Department of Housing and Urban Development, the national median housing sold price currently sits at approximately $470,600. This number, while high, is only a 3.4% increase from the sale price from last year, which was $454,900.
We received diverse responses when inquiring about why service members were confident in purchasing homes. Twenty-one percent of respondents said it was due to increased credit scores. Nineteen percent cited increased personal or familial savings. Seventeen percent attributed their optimism to increased personal or family income, with another 17% claiming it was due to more homes being available in their price range.
When asked about the year-to-year prospects of purchasing a home, military personnel showed further optimism about buying in 2022 and 2023. Sixty-eight percent of all surveyed said that it was either a somewhat good time or a very good time to buy a home, with prospects increasing next year.
When asked about buying a home in 2021: Data showed that perceptions of home buying last year were mostly neutral, with a slight lean toward positivity. Thirty percent said it was a somewhat bad time to buy, with 15% saying it was a very bad time to purchase. However, 38% said it was a good time to buy, and a further 17% said it was very good.
When asked about buying a home in 2022: Those surveyed stated that the prospects of homeownership are much better for 2022. Only 25% said it was a somewhat bad time to buy, with 7% saying it was very bad. Thirty-nine percent said it was a somewhat good time to invest in a home, with a noticeable 29% saying it was very good.
When asked about buying a home in 2023: Optimism continues to grow for prospective buyers looking to purchase in 2023. Twenty-one percent think it will be a somewhat bad time to buy, with only 6% thinking it will be very bad. These figures are the lowest of the three years, showing few believe home prices will become more severe next year. Interestingly, 37% said it would be a somewhat good time to buy, which is the lowest of all three years. However, 36% said it would be a very good time to buy a home, 7% more than in 2022 and 22% more than in 2021. Barriers to Homeownership for Military Service Members
According to our results, 46% said that their ability to buy a home was better than last year. However, many were still reluctant to go all-in on homeownership due to factors related to the housing market. Of all those surveyed, 5% said that no homes were available in their region, 7% said they were burdened with financial debt, 8% said they had a low credit score, and another 8% said they lacked the appropriate savings.
The three highest-rated barriers to entry were rising mortgage rates at 9%, rising housing prices at 11%, and rising inflation at 13%.
The top three entries on this list were no surprise, as mortgage rates, inflation, and housing prices are all at unprecedented levels. Mortgage rates are at levels not seen in over 20 years, currently sitting at 7.2%, an amount not reached since April 2002. Compared to last year, rates have more than doubled from 3.14% in October 2021.
Similarly, inflation rates are hitting historical highs, currently at 8.2% – while this is a drop from its peak in January at 9.1%, these are numbers not seen since 1981. Housing costs have also seen significant bumps, increasing by 7.5% from 2021. This increase in price, combined with the nation’s housing shortage, has led to a drop in the number of homes sold since 2021 by 22%. Buying vs. Renting in the Future
When asked about their opinions on buying homes vs. renting, we saw further optimism for homeownership among military personnel. Seventy-one percent said they prefer to buy over rent, even if they had to move in the next 90 days. Furthermore, 64% of those surveyed stated that they currently rent but want to purchase a home in the coming year. Service members also indicated that, even when posed with immediate moves or frequent deployments and relocations, they still preferred to own a home over renting.
When it comes to buying a home, one of the benefits available to all service members is the Basic Allowance for Housing (BAH). BAH are funds the U.S. military provides to its service members to offset the cost of housing. It only applies to service members who choose not to live in government-provided housing. BAH rates are determined by regional housing costs, pay grade, and dependency status. The nice thing about BAH rates is that they reflect the areas in which service members are deployed, meaning they’ll go up in high-cost areas. However, while BAH can offset housing costs greatly, it does not provide enough funds to cover everything. Take this example from Fortune –
“According to a data analysis by The Associated Press of five of the most populous military bases in the U.S., housing allowances across all ranks have risen an average of 18.7% since January 2018. In that span, according to real estate company Zillow, rents have skyrocketed 43.9% in those markets: Carlsbad, California; Colorado Springs, Colorado; El Paso, Texas; Killeen, Texas, and Tacoma, Washington.”
After analyzing our survey results, we found that most military personnel are optimistic about today’s housing market. Most are looking for a permanent home, regardless of consistent deployment, and many believe that now is a good time to buy. A sizable portion of service members also stated that they’re in a far better position to purchase a home now than last year. Furthermore, just under 40% believe 2023 will be an excellent time to invest in a home. In the face of rising home prices, skyrocketing mortgage rates, and unprecedented inflation, military service members still possess a great deal of optimism for homeownership.
House Method surveyed 550 active military members using a third-party survey platform to identify attitudes on homeownership and the current housing market condition. We asked questions comparing October 2022 to 2021 to measure the changes in their opinions over a year-long period.
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