Mapping Homeownership: An Ethnographic Expedition through 2023’s Real Estate Landscape
I am currently a graduate student in my third semester, pursuing Design Innovation at the Massachusetts College of Art and Design. In one of our classes this semester, Market Insights, we delved into the intricacies of the US housing market and explored it targeting 1st time home buyers. Prof Ben Little’s initial introduction to topic ignited my curiosity, yet I was unprepared for the complexities and emotional challenges 1st time home buyers have to experience.
As an international student from India, navigating the American real estate market landscape proved daunting, I had to start with understanding the market vocabulary moving ahead with laws and rules. While familiar with my native country’s system, drawing comparisons to the US market was an enlightening experience. I learn that both in India and US houses hold a dual significance: they represent both the safe and cozy space for family and secured, stable investment and passive income for future. Inspired by my parents, who built their first home at the age of 27, I initially aspired to achieve the same milestone before reaching that age. However, as I delved deeper into financial realities and diverse market dynamics, my vision shifted from constructing a house to acquiring an apartment. Even this once-distant goal soon dissolved into the clear realization that owning any space — house or apartment — by 27, let alone 30, might be an unattainable aspiration. Over the past two decades and more, significant transformations have occurred in markets, income structures, lifestyles, inflation rates, and population demographics. These shifts have significantly affected the once attainable dream of homeownership increasingly out of reach for many, myself included.
Through our exploration of the US housing market, I came to the stark realization that the hurdles faced by an individual in owning a house are comparable in both the countries. The roots of the US housing market trace back to the 18th century, with zoning regulations introduced in the 19th century. The majority of houses we encounter today were constructed in the early 20th century and post-World War II, utilizing mass production techniques that not only addressed housing needs but also served as a significant source of employment.
We worked as a group and in our research, we adopted an ethnographic and qualitative approach, conducting interviews over Zoom with both potential home buyers and current homeowners who recently bought a house within the past two years.
Here, I would like to discuss the two key insights that emerged from our comprehensive research.
Above storyboard is just a simple overview of house buying journey, each of these steps have multiple micro steps and concerns that buyers have to cater to. In the two insights I am gonna focus on finances, loans and the final step before buying the house inspection part.
The entire process hinges on the buyer’s level of preparedness in terms of their financials. It commences with the crucial steps of saving for downpayment and obtaining pre-approval for a mortgage. Obtaining pre approval shows the buyers readiness for buying, it can be obtain one or four moths before starting the journey. However, obtaining pre-approval is not the final task, as sellers may not favor the type of loan or grant a buyer possesses.
Our user interviews shed light on a reality of loan grants available for 1st time house owners. Some sellers harbor reservations towards FHA (Federal Housing Administration) and VA (Department of Veterans Affairs) loans. FHA is a government loan grant for first-time homebuyers, while VA provides loans to military veterans. FHA offers government-backed loans for first-time homebuyers and VA provides assistance to military veterans; these options, despite offering benefits like low-interest rates and lower down payments up to 3% and as low as 0% for some qualified buyers, aren’t embraced by many sellers. These options are more favorable to buyers due to their stringent house inspection requirements, leading to higher quality purchases
According to Bankrate’s article what is private mortgage insurance, “any mortgage with a down payment of less than 20% of the sale price usually requires private mortgage insurance (PMI)” adds an extra cost for buyers unless waived by the lender.
From the seller’s perspective, however, FHA and VA loans are less preferred as they introduce complexities into the selling process. The more rigorous inspection process can pose challenges for sellers, especially if the house is in poor condition. Sellers may need to make repairs before selling or reduce the selling price, leading to sellers favoring a buyers who waive the inspection. The market also have a perception that FHA borrowers are riskier due to lenient financial requirements by the lenders for the borrowers. This discrepancy often puts sellers and buyers on opposite sides of the negotiation process.
Second insights delve into the process of house inspection, it is the last step before finalizing the deal and signing the deed, plays a pivotal role in determining the physical condition of the property. Buyers learn about the sewage systems, pipes and, other hardware of construction uncovering both positive and negative aspects of the property. In some cases, buyers discover significant issues but grapple with the uncertainty of finding another suitable property because of the cut throat competition in the buyers market. The inspection report becomes a critical factor in the decision-making process, leaving buyers in a dilemma. However, the second insight reveals that some sellers prioritize waiving inspections over receiving more money (in loan insights we learn that sellers prefer receiving cash payments and offen accept the highest bidding). This preference often stems from a sense of desperation among buyers who fear missing out on a property and end up compromising their expectations and dreams. Sellers, too, favor buyers who waive inspections to avoid reducing the price and performing repairs. Despite these preferences, it remains crucial to ensure that homebuyers move into structurally sound properties, underscoring the importance of thorough house inspections. House inspections are in buyers favor and their only right to refuse the purchase and receive fair price options.
For this particular project we were only focusing on research and learning about research methodology. Through this insights I derived some opportunity spaces for how might we make this experience more transparent and fair for both buyers and sellers by bringing transparency in sellers market an opportunity to allow buyers to see the actual footage of the property before making any decision.
As this was a group research for more interesting insights I would recommend you to visit other articles by my fellow team members Danica, Emily
