The National Association of Realtors released its 2013 National Housing Pulse Survey recently, and they’ve been sharing bits and pieces for free on their blog.
A more interesting tidbit shared over the weekend shed some light on the sacrifices home buyers make in order to scrounge up enough cash to buy a piece of property.
Ditching the Luxury Lifestyle
The top cutback made by all buyers was on “luxury items” or “non-essential items,” which is pretty standard if you’re gearing up to purchase anything expensive.
Of all buyers surveyed by NAR, 32% indicated that they had to cut back in those departments.
Broken down further, 42% of first-time buyers said they had to ditch such items, compared to just 26% of repeat buyers.
Entertain Yourself
The second biggest concession was entertainment, with 26% of all buyers indicating that they had to forego fun while saving up to buy a home.
Again, many more first-time buyers (35%) had to make this sacrifice compared to seasoned repeat buyers (20%).
Whether you’re in the market to buy a home or not, you should limit how much you spend on entertainment, which can add up in a hurry.
I Don’t Have Anything to Wear
The third biggest hard decision a prospective buyer had to make involved clothing, with 20% indicating that new clothes were on hold.
More than a quarter (27%) of first-timers had to wear their old clothes while home shopping, compared to 15% of repeat buyers, who perhaps felt more at ease with the process.
It’s certainly easier to buy a home the second or third time around, knowing the potential pitfalls and setbacks that can occur.
At the same time, the housing and mortgage market is constantly in flux, so what worked five years ago might not fly today.
How Does Camping Sound?
The fourth biggest guilty pleasure given up was vacationing, which 13% of buyers said they canceled to pursue their home buying crusade.
Again, more first-time home buyers (14%) cut back in this category compared to those who’ve already been there (11%).
Believe it or not, there are plenty of times when buyers or refinancers are out of town are critical periods during the loan process.
Don’t go on vacation if you know your loan documents might need to be signed, or if you’re anywhere in the process for that matter.
There’s a good chance you’ll need to sign or fax an important document, so stay close to home until the loan funds.
Ride a Bike
The fifth biggest sacrifice buyers made was either selling an existing vehicle or deciding not to purchase one, though only six percent of respondents noted this.
It was again higher for first-time buyers (7%) than repeat buyers (6%), but just barely.
For the record, you shouldn’t make any significant purchases when shopping for a home, especially something that requires a loan, like a car.
If you take out another loan around the same time you take out a mortgage, your credit score will likely take a hit, and you could even have issues with your debt-to-income ratio exceeding the allowable limits.
Conversely, selling a car could actually help you in the affordability department if you had an associated car loan/lease that you could now remove from your DTI calculations.
So those were the top five sacrifices. Some respondents (6%) also reported taking a second job to earn some extra income for the home purchase.
Just note that while it’s great to earn some extra dough, a short-term, part-time job likely won’t be used for qualification purposes.
Overall, 53% of buyers said they didn’t need to make any sacrifices at all, so perhaps affordability isn’t a concern just yet. Either way, save up, season your assets early on, and be ready to document everything!