Housing market affected buyer taste and preferences: Survey

Yahoo Finance's Brian Cheung and Akiko Fujita discuss how prospective home buyers made trade-offs to get into the housing market amid low mortgage rates.

Video transcript

BRIAN CHEUNG: Well, time now for our Chart of the Day. And today's addresses the question of how the hot housing market nudged Americans who ended up actually buying. AnyTime Estimate's survey showing that among 880 homebuyers, the largest share, about 40%, said they bought because of low rates.

But more interesting are the compromises and strategies that home buyers had to deploy in this hot housing market. For example, increasing the budget, speeding up plans to buy a home, having to expand the search location, and even having to settle for a house that was smaller than they had originally hoped for.

So it does kind of underscore, I guess, Akiko, that people were willing to make these tradeoffs as opposed to abandon or even delay plans to buy a home, which kind of ranked a little bit lower above these other options.

AKIKO FUJITA: Yeah, you have to wonder what the repercussions are going to be on that second point you just made in terms of increasing my budget because there was certainly a lot of FOMO going around because the rates-- the mortgage rates were so low. I mean, you have to wonder how many home buyers actually stretched-- you know, stretched their budgets who may come to regret it down the line. I mean, we keep hearing this is obviously not a repeat of what we saw prior to the financial crisis because Americans are better positioned--

BRIAN CHEUNG: [INAUDIBLE]

AKIKO FUJITA: Exactly. That's not what drove it. But I do wonder how many Americans are going to come to regret the purchase.

BRIAN CHEUNG: And again, a lot of this is in hindsight, right? These are home buyers that maybe bought last year, for example, or earlier in the year. But with mortgage rates much higher now, it's important to note that the budget side of things might still be a factor here because just because mortgage rates are going up, yes, home prices might go down.

But if the housing supply is low, the principal of the house is still going to be high, in addition to higher interest payments. So it's not necessarily the case that it's going to be cheaper overall, something that home buyers, I'm sure, are very closely dialed into.