How Buyers Landed a Home in Today's Competitive Market (2022 Study)

Home Sale Prices | Making Multiple Offers | Buying Sight Unseen | Home Search Time | Priorities vs. Compromises | Buying a Fixer-Upper | Home Buyer Regrets | All-Cash Offers | Home Buyer Expectations | Home Buying Made Easier

The American dream of owning a home is still alive and well. Despite high prices, low inventory, and fierce competition over the past two years, buyers have persevered through the challenging market.

Yet few came away with their dream home — especially first-timers who accounted for 70% of buyers in 2021 and 2022. Of those, two-thirds (66%) were millennials who were eager to own homes to raise their families.

In their desperation to become homeowners, first-time buyers were more likely than repeat buyers to take financial risks. For example, new buyers have been saddled with higher rent and haven't benefited from rising home values, but they were willing to spend more on their home purchases.^[1]

First-timers paid a median of $510,000 for a home in 2021 and 2022 — about 13% more than the $450,000 that repeat buyers paid.

To cope with these high prices, new buyers were 8% more likely to make compromises on their home purchase. But in the Wild West of home buying, even repeat buyers struggled to lasso a deal.

Overall, nearly one-fourth of all buyers (22%) weren't satisfied with the home-buying experience.

After previously buying in "normal" market conditions, repeat buyers were 75% more likely than new buyers to be dissatisfied, but the market left much to be desired among first-timers who struggled to find affordable homes.

To learn more about recent American home buyers, we surveyed 1,001 people who purchased a home in 2021 and 2022.

We found that 88% of respondents said the competitive housing market impacted their home-buying experience, with buyers responding by increasing their budgets (38%) and fast-tracking their plans to buy a home (36%) before prices — and interest rates — rose even higher.

Read on to learn more about the obstacles buyers encountered and the compromises they made to own homes.

1 in 3 Buyers Paid Over Asking Price for Their Home

Home prices have been pushed higher as would-be homeowners offer sellers more than the asking price to make their offers stand out from rival buyers. We found that almost one-third of buyers (31%) paid over asking price for their home.

In the past, real estate agents have suggested offering 1%–3% more than the asking price, but today's home buyers are exceeding that recommendation to beat the competition. Of those who paid more than asking price:

• 1 in 3 offered 1%–10% over the asking price.
• 1 in 4 offered 11%–20% over the asking price.
• 1 in 3 offered 21%–30% over the asking price.

The median amount paid over the listing price was $65,000.

Paying over the asking price is 11% more common among first-time buyers, who are also more likely than repeat buyers to offer more. First-timers paid a median of $77,500 over the listing price, while repeat buyers offered $60,000.

Overbidding often left buyers in a financially precarious position. To afford their new homes, about 1 in 3 buyers (31%) had to put down more funds than expected, while another third (30%) had to max out their budget.

Although finding an affordable home was the second-most important priority among home buyers, more than half of survey respondents (57%) purchased a home that cost more than the national median price of $428,700.^[2]

About 1 in 4 respondents (26%) bought a home that cost $600,000–$899,999, while 1 in 8 purchased a home over $900,000 — including 1 in 20 who splurged on a home that cost $1 million or more.

80% of Buyers Made More Than 1 Offer

With so much competition, even buyers who offered thousands of dollars over asking price experienced rejection. Approximately 80% of buyers in 2021 and 2022 made more than one offer on a home before theirs was accepted.

Of those who submitted multiple offers, 41% made an offer on five or more homes, and 1 in 10 made an offer on 10 or more homes.

First-time buyers, in particular, struggled to submit attractive offers and were 1.6x more likely than repeat buyers to submit at least 10 offers.

Sellers often chose offers from previous home buyers, who likely had funds from the sale of their former home to pay in cash, increase their down payment, or win a bidding war.

Repeat buyers made only one offer 25% of the time, compared to 17% among first-time buyers — a 45% difference.

1 in 3 Buyers Submitted an Offer on a Home Sight Unseen

Homes have sold at a rapid pace over the past two years. To move quickly, more than 1 in 3 buyers (36%) made an offer on a home without seeing it in person first.

Making an offer on a home sight unseen is expedient, but it's not without risk. Buyers forgo the opportunity to see the home's true condition and, instead, rely on second-hand information, such as online photos or the opinion of a real estate agent.

In their desperation, first-time buyers were more inclined to take that risk to own a home. They submitted an offer on a home sight unseen 1.6x more often than repeat buyers.

Two-thirds (67%) of those first-time, risk-taking buyers were millennials. About 90% of millennials said they'd be willing to buy a home sight unseen, and 40% actually submitted an offer.^[3]

However, 1 in 6 buyers (17%) regretted purchasing a home without seeing it first.

One-Third of Buyers Searched 3 Months or More for a Home

Homes are seemingly under contract the minute they're listed, but it takes time to find a home in today's market — especially when multiple offers are rejected.

The house hunt took one month or more for nearly two-thirds of buyers (61%). About 1 in 3 buyers (32%) searched for three months or more, while 1 in 8 (12%) looked for six months or longer before their offer was accepted.

From July 2020 through June 2021, listed homes typically had a buyer within one week, but only 8% of survey respondents found a home that quickly.^[4]

Repeat buyers were 2x more likely to land homes in less than one week — possibly because they could use money from their previous home sale to pay cash or win a bidding war without busting their budgets.

Whatever the case, buyers lucky enough to find a home quickly typically viewed the home-buying experience more positively — about half (47%) said it made the process easier than expected.

80% of Home Buyers Compromised on Their Priorities

After months of searching without finding a home, exhausted buyers altered their approach. About 80% decided to compromise on their home-buying priorities, with first-timers 8% more likely to make at least one compromise.

The most common sacrifice buyers made was on price. Approximately half of buyers (45%) wanted an affordable home, but more than 1 in 3 (35%) had to offer a higher price.

More important than price, however, was finding a home in a good neighborhood, which was the No. 1 priority among half of buyers (50%). Yet 1 in 5 (20%) had to settle for a home in a less desirable location. Of those, 73% were first-time buyers.

Although compromising on location helped buyers land a home, 1 in 5 (20%) weren't satisfied with their new neighborhood.

Buyers also compromised on specific home features, with about 1 in 4 (24%) purchasing an older home or decreasing their desired square footage (25%). However, at 3,000 median square feet, home buyers in our study purchased homes that were larger than the national median of 2,356 square feet.^[5]

No house is perfect, and sacrifices are often worth it, but 1 in 5 buyers (20%) weren't satisfied with the home they purchased.

Fixer-Uppers Weren't Always a Bargain

After price, the second most common compromise among buyers was purchasing a home that needed significant repairs. More than half of buyers (55%) in 2021 and 2022 opted for a fixer-upper.

Of those, about 75% were first-time buyers, including many millennials. Among that generation, 82% of members said they'd buy a fixer-upper, and 56% actually did.

Home buyers in expensive markets may have been inclined to bet on these riskier homes if they were the best they could afford. But that doesn't mean buyers got a bargain.

Buyers who purchased a fixer-upper reported spending more than the average buyer. The price per square foot for a fixer-upper cost $187, while a home in good condition cost $163 per square foot.

Varying home values in different markets may explain this surprising price difference. For example, in California, where the median listing price is $759,500, a fixer-upper may still be more expensive than a turnkey property in Nebraska, where the median list price is only $314,950.^{[6] [7]}

Although a fixer-upper might seem like a good investment for cash-strapped buyers, it can be costly to repair and maintain. From 2019–2022, the share of homeowners who spent at least $10,000 on maintenance and repairs each year tripled from 6% to 20%.^[8]

It's no surprise, then, that 1 in 4 home buyers (25%) regretted purchasing a home that needed too much maintenance, and another quarter (24%) regretted buying a fixer-upper.

3 in 4 Buyers Have Regrets About Their Home Purchase

Compromising on their priorities inevitably led to regret among nearly three-fourths of home buyers (72%).

Spending too much money was the No. 1 regret, with 1 in 3 (30%) saying they overspent. This was a common sentiment among first-time buyers, who were 21% more likely than repeat buyers to feel remorse.

The second most common regret was speeding into the home-buying process without pausing to consider the financial implications or ensuring the home was a good fit.

Nearly 1 in 3 home buyers (30%) said they rushed to make a decision, but more than 1 in 4 (26%) regretted buying too quickly.

1 in 10 Buyers Paid in Cash

Buyers who offered the highest price didn't always seal the deal. Sellers looking to close fast and with fewer risks were keen to accept all-cash offers.

About 1 in 10 respondents paid all cash for their home. Of those, more than one-third (37%) were repeat buyers, making them nearly 1.5x more likely than first-time buyers to pay in cash.

Among all-cash buyers, nearly half (43%) said they make enough income to do so. That's an impressive feat, considering home prices have soared by 118% since 1965, while income has only increased by 15%.^[9]

Other buyers weren't so lucky, and more than 1 in 4 had to withdraw money from savings (29%), while another quarter (27%) had to take funds from their investments.

Buyers also secured funds for their all-cash purchase by:

• Borrowing from friends and family (25%)
• Using money from the sale of their previous home (23%)
• Spending their inheritance (20%)

40% of Buyers Put Down 20% or Less on a Home

For most buyers, paying for a home with cash wasn't feasible. Ninety percent financed their purchase, but it was still a struggle to produce funds for a down payment.

Saving for a down payment is a looming barrier to homeownership, and nearly 40% of buyers put down less than or equal to the standard 20%.

Although repeat buyers were more likely to pay in cash, first-time buyers took a different approach to make their offers more attractive to sellers.

New buyers who were financially able put down more than 20%, not only to reduce the total cost of the loan, but to signal to sellers that they'd credibly qualify for a mortgage.

First-time buyers were 21% more likely than repeat buyers to put down 21%-30% and 16% more likely to put down 31%-40%.

Among buyers who financed, the most popular type of loan remained a conventional mortgage. Nearly 1 in 3 buyers (30%) financed with a 30-year loan, while almost 1 in 4 (21%) chose a 15-year loan.

The percentage of buyers financing with a 15-year mortgage was up from 13% in January 2022.^[10] Although the monthly payments are higher, 15-year mortgages generally have lower interest rates. That could attract buyers as interest rates tick back up, with more rate hikes on the way.^[11]

One-third of buyers (33%) have a loan insured by the Federal Housing Administration (FHA). These loans are especially popular among debt-burdened millennials because they have less restrictive credit requirements and allow home buyers to put down as little as 3.5%.^[12]

In fact, millennials are 25% more likely to have an FHA loan than members of Generation Z.

Stress Makes the Home-Buying Process More Difficult Than Expected

Buyers recognized the challenges of purchasing a home in today's market, but nearly 1 in 3 (32%) found the experience even more difficult than expected.

Having previous home-buying experience made it only slightly easier to navigate the market. One-third of new buyers (33%) said purchasing a home was more difficult than expected — just more than the 30% of repeat buyers who said the same.

The No. 1 reason home buying was more difficult than expected was because of stress and anxiety, followed by:

• Expensive home prices (38%)
• Difficulty finding a home (38%)
• Too much competition (33%)

Although buying a home in the current market was a daunting prospect, homeownership was still an exciting experience for first-time buyers.

Nearly two-thirds of new buyers (66%) said buying a home made them feel excited, and about half (55%) said the experience made them feel good.

Half of Respondents Said a Good Realtor Made Home Buying Easier

Buying a home in today's market is tough, but almost half of respondents (49%) said the home-buying process was easier than expected.

A good agent is the No. 1 reason buyers said purchasing their home was easier than expected, and 75% of buyers who hired one were satisfied.

An agent's job includes a myriad of duties that can make the home-buying process less daunting, especially for new buyers.

For example, negotiations were one of the toughest parts of the home-buying process for first-time buyers, who were 2x more likely than repeat buyers to say parlaying with sellers made purchasing a home more difficult.

That's especially true in today, when sellers have the upper hand. Nearly half of buyers (43%) had to make financial concessions, such as waiving a home inspection, and more than one-fourth (27%) had to close on the seller's timeline.

Although sellers may not cede much, a seasoned real estate agent can advocate on buyers' behalf and help them avoid the most risky and detrimental concessions — or advise them when to walk away from a bad deal.

In addition to hiring a good real estate agent, buyers who said the home-buying process was easier than expected thought so because:

• They found a home quickly (47%).
• They found their dream home (43%).
• The financing process was easy (41%).
• The seller was responsive (38%).

Methodology

The proprietary data featured in this study comes from an online survey commissioned by Anytime Estimate. One thousand and one people who reported having bought a home in 2021 or 2022 were surveyed July 6-9, 2022. Each respondent answered up to 21 questions related to their financial situation and home-buying experience.

About Anytime Estimate

Stay on top of your money, around the clock. Since 2009, Anytime Estimate's straightforward calculators and expert articles have simplified mortgages, refinancing, and other real estate costs — fast. In 2021, Anytime Estimate was acquired by Clever Real Estate, a free agent-matching service that has helped consumers save more than $82 million on real estate fees. Research by Anytime Estimate's Data Center has been cited by The New York Times, CNBC, MarketWatch, NPR, Apartment Therapy, Yahoo Finance, Black Enterprise, and more.

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FAQs

It depends on your personal savings, credit score, and investment goals. With low supply leading to high prices and fierce demand, about one-fourth of buyers (25%) in 2021 and 2022 delayed their plans to buy a home. But interest rates will almost certainly climb higher, and with no guarantee that more homes will hit the market, home values are still predicted to rise. About one-third of buyers (36%) sped up their plans to buy a home before prices become more expensive. Learn more.

Ninety percent of home buyers financed their purchases. About 1 in 10 buyers paid for their home with cash, with nearly half of all-cash buyers (43%) saying they make enough money to do so. Learn more.

Approximately 80% of buyers in 2021 and 2022 made more than one offer on a home before theirs was accepted. Of those who submitted multiple offers, 41% made an offer on five or more homes, and 1 in 10 made an offer on 10 or more homes. Learn more.