Americans are wildly misinformed about home prices — 73% don’t think homes are affordable right now, yet 60% actually underestimate the median home sale price, according to new research from Real Estate Witch, an online publication that connects readers with expert real estate advice, owned by Clever Real Estate.
Just 1 in 7 Americans (14%) know the current median home price falls between $400,000 and $499,000. A quarter (23%) think the median home costs between $200,000 and $299,999, while another 23% think it costs between $300,000 and $399,999.
Despite underestimating current home prices, 76% of non-homeowners are concerned about rising home prices.
In addition, just 12% of Americans know the current interest rate for a 30-year mortgage hovers around 7%. Nearly half (43%) believe the rate is higher, with a whopping 1 in 4 (26%) believing it exceeds 10%. The last time rates reached 10% was more than 30 years ago in 1990.
Although a third of non-homeowners (31%) say they’re knowledgeable about the home-buying process and 43% say they’re knowledgeable about mortgages, 62% wrongly think it’s required to put down 20% on a home. In fact, 21% believe buyers need to put down more than 20%.
Buyers are required to pay private mortgage insurance (PMI) if they don’t put 20% down. However, 85% of Americans don’t know what PMI is — including 83% of current homeowners.
Further, about one-third of Americans (32%) say a credit score of at least 700 is necessary to purchase a home. In reality, buyers can qualify for a conventional loan with a score of 620.
The seller typically pays agent commission for the buyer, but 62% of Americans think the buyer pays their agent’s commission. This misunderstanding could be why 65% of Americans wrongly think buyers can save money by not working with a real estate agent.
The survey also found that respondents underestimated the age of the average homebuyer: The average age of a first-time buyer is 36, but 73% believed it was younger.
With misinformation running amok, it’s not surprising that 83% of homeowners were surprised by parts of the home-buying process — 65% had to adjust their budget, and 63% had to adjust their priorities.