Recent survey shows American military among the most optimistic homebuyers for 2023
Just because so much of the rest of the home-buying public is in an interest rate and high price funk doesn’t mean those who defend us are in there with them. According to Forbes’ Senior Contributor Brenda Richardson, a recent survey shows that many military members and veterans are optimistic about buying a home.
According to a study conducted by Veterans United Home Loans, nearly three-quarters of current service members (71%) plan to buy a home in the next five years. “Even with the rocky rate and affordability outlook, three in 10 current service members and 15% of veterans plan to buy in 2023,” says Richardson. “More than half of current service members anticipate buying a home in the next two to three years, especially Reserve and National Guard members.”
Veterans United’s Chris Birk adds, “After facing significant headwinds over the last year, veterans and service members are poised to rebound in 2023 as the market starts to shift back toward home buyers. For younger veterans and service members, the VA loan benefit means they don’t face the same hurdles that keep many civilian counterparts out of the housing market, chiefly the need for a down payment and great credit. Younger buyers have led the way in VA lending in recent years, and that storyline will continue through next year and beyond.” He goes on to say that veteran home buyers are buoyed by additional savings starting this summer after a temporary hike in the VA funding fee sunsets in April, saving them a collective $200 million a year.
Of the various branches of the armed services, Reserves and National Guard members are the most optimistic about buying in the next year (43%) compared with active duty members at 20% and veterans at 15%. The survey also reveals that almost 70% of active duty military members surveyed are renting or live in base housing with only 29% owning homes, versus 61% of Guard/Reserve and 58% of veterans that are homeowners.
Of course, the ability to buy without a down payment is the top reason veterans choose a VA loan, followed by competitive interest rates and limits on closing costs and fees. Those living close to military bases are among the most knowledgeable about VA home loans, while awareness diminishes the farther one travels from active-duty facilities. Those who are not aware of their eligibility tend to pay more money out of pocket. Another finding is that nearly half of service members and veterans who have not dealt with VA loans believe that other loan options may be more affordable and easier to use. About a quarter of them are unaware of their benefit or didn’t think they would qualify.
The month of April is when the VA funding fee is scheduled to decrease, which will also help with overall mortgage payments. Richardson says affordability is top-of-mind for prospective home buyers and this change will significantly help this group of buyers, especially first-time buyers entering the market.
She also adds that as monthly mortgage payments rose for home buyers in 2022, there was an increase in government lending, while conventional lending declined, according to data from Black Knight. Government lending is opening up doors to homeownership for those that may be priced out of conventional product offerings.
About 62% of service members and veterans say zero down payment is the top reason for using their VA home loan benefit. Veterans have a better understanding of the advantages of using the benefit as compared to active duty members. Unfortunately, misconceptions about the VA loan persist.