Home Buying in the USA
Here is a brief dive into my Market Insights project for my graduate program in Design Innovation during Fall 2023 at Massachusetts College of Art and Design.
First-time Home Ownership was a Market Insights project that introduced me to a whole lot of knowledge about this space in the US market. Being an international student here everything was new, interesting and insightful.
The home buying market in the USA has been shaped by a mix of economic, social, political, and technological factors. Understanding this historical context is crucial for accurate market research analysis in homeownership trends.
I created this graph only to be able to visualize the history of the home buying trend in the US from when it all began in 1785 till a little past 2020. Over the years, home ownership has become an integral part of American culture, not only to be able to own a home for growing a family but also to build generational wealth and achieve a sense of accomplishment. The history of the home buying market in the United States is a complex tapestry, woven with economic, social, and political threads.
One such interesting fact about the history of home ownership in the USA is that redlining was a hardcoded factor in the home buying process from a local level to the federal level. Redlining is the practice where banks and other financial institutions denied mortgages to people, primarily in minority communities, based on the area where they lived. Areas with a high proportion of racial and ethnic minorities were often targeted. This denied them the chance to buy homes and build equity, contributing to the wealth gap that persists today. Lack of investment in these specific areas led to urban decay, as homeownership is often a key driver of neighborhood stability and improvement.
Over time, redlining was recognized as discriminatory and illegal. The Fair Housing Act of 1968 and the Community Reinvestment Act of 1977 were steps toward outlawing redlining practices. However, the legacy of these practices still affects neighborhoods and homeownership patterns. There has been an increasing acknowledgment by government entities and financial institutions of the role redlining played in creating systemic inequalities. Various programs and initiatives have been launched to address the long-standing impacts of redlining, including efforts to increase homeownership opportunities in historically marginalized communities.
This brings us to somewhat of a conclusion that in order to be fair in the housing market, one must simply sell a house to a buyer who can pay the highest. During my research in this project, an observation I made was that new home buyers want a seller who can empathize with them. Few of the interview participants even mentioned the use of a “love letter” or a letter to the seller that talks about all the emotional reasons of why they want to buy that specific house, whether it was about growing up in the same neighborhood and wanting to continue their adult life there or growing their family in a community or location that they felt was the best for their children’s upbringing. The buyers felt it was important to be able to express their emotions and feelings to the seller so that they could understand their needs and be heard. The catch here is that in today’s times, these letters are not encouraged by realtors or even legal in some parts of the country like Oregon or California.
The Fair Housing Law Act has specific personal information that if the buyer discloses to the seller, it may be a risk for the seller i.e. a possibility of making the sale on a biased note. The information includes religion, creed, culture, race, nationality, gender and more. It is not the right or ethical way for a buyer to impress a seller and be chosen, making it unfair to all the other buyers. Although, there could be a way to allow for some level of empathy and relationship building between buyers and sellers.
Our interviewees displayed a great level of stress that they experience as new home buyers during the 6–12 months or even more in their home buying journey. I think that allowing for some empathy and a certain level of emotional freedom can allow this stress to be managed better or even more efficiently. Here is a visual home buying journey map I made with a graph of emotions and feelings at each phase of this process.
The research also revealed that home buyers have to deal with surprises or more like disappointments while making house visits either because the listing does not mention the correct size, rooms and other info of the house or because something is broken or incomplete and not shown or disclosed in the listing. Buyers have to prepare to take on repairs and renovation costs once they buy a house but it is even more disappointing and demotivating when this house hunting phase is done under immense stress, time-constraints and very few feasible options in the market. There is a need to improve authenticity or home information shared on the various online browsing platforms to avoid additional stress and disappointments in the home buyer’s journey. Of course there are many companies that “verify” a buyer but not many options are available for buyers to see some kind of honest reviews, a live/recorded video by anyone apart from the seller themself or even a compulsory inspection of a house like a carfax report for buying a car.
The home buying market in the USA is extremely competitive and crowded with old house structures, limited space and high income-cost of living gap. Apart from these top issues are the ones I mentioned above that go blindsided because they involve a translucent layer of problems in this system. These are problems that are opportunities to work with and can make a huge impact in the way home buying is experienced by people in the US.
