Closing the gap to homeownership for first-time homebuyers
HomeStretch aims to close the disparity gap in homeownership, especially among people of color and younger generations, by educating them on the home-buying process and connecting them to resources that eliminate barriers to homeownership.
According to Simply Insurance, about 66% of Americans currently own a home. The independence and pride of owning your own home, while building equity, receiving tax benefits, and establishing stability, drive people to purchase property. As of 2022, 26% of homebuyers were first-time homebuyers. Most first-time homebuyers begin their home-buying process by searching online through websites like Zillow, Redfin, etc, not realizing that the home-buying experience begins before looking for a property.
Disparities in homeownership are especially significant by age and race. 65+ year-olds have the highest homeownership rate among all age groups at 79%, while homeownership under 35 years old is only 38%. White homeownership rate is among the highest at almost 75%, while homeownership rates among Black and Hispanic groups are 45% and 48%, respectively.
Using LinkedIn, Facebook, and Instagram networks, I identified a few different categories of prospective users and launched a survey with 32 responses:
On average, responders had little to moderate information about the home-buying process prior to purchasing a home.
Top 3 challenges in the home buying process:
Quotes:
“There were a lot of steps that I had no idea about during the process”
“We lived paycheck to paycheck so figuring out a down payment was almost impossible”
“I have been down this path several times and this last time has helped me fully understand that the better my credit score the lower the interest and favorable terms.”
“Expenses I wasn’t aware of”
“There was mixed information in how much is needed for a down payment”
“Typically buyers are not prepared for the offer process”
“Although many lenders have down payment assistance programs, individuals with higher debt to income ratios do not qualify for them. This then requires individuals to have to come up with down payment funds independently while simultaneously paying off debt”
“Down payment: this takes time and planning. Many people don't realize they need to do this before reaching out to a RE agent.”
Using the survey population, I completed 6 user interviews:
Key insights:
Challenges & Quotes:
1. Saving for a down payment
User #1: “Something always comes up. You can save money but then something comes up”
User #3: “I personally found saving a large sum of cash to be the most difficult”
User #4: “Although many lenders have down payment assistance programs, individuals with higher debt-to-income ratios do not qualify for them. This then requires individuals to have to come up with down payment funds independently while simultaneously paying off debt and arranging for moving cost.”
2. Real Estate Professional
User #2: “Finding a competent Real Estate agent is tough. The market is saturated with mediocre agents who are just looking for a commission”
User #4: “My real estate agent did not try hard enough. He primarily sold luxury homes but once he saw my budget, he only sent me 500 sqft condos … I ended up finding my home on my own and he did not negotiate the price or the contract … instead of explaining the home buying process to me, he gave me a pamphlet to read … my real estate agent didn’t even stay with me while I was signing my mortgage documents.”
3. Credit score
User #5: “I was led to believe that if you have negative things on your credit, it would fall off in a few years and not really affect it. I was really upset when I had to go back and pay those things off.”
User #6: “A lot of my potential clients have credit issues which prevents them from getting a preapproval, even if they can comfortably pay the mortgage based on their existing expenses.”
User #6: “I usually see first-time home buyers struggle with credit”
4. Lack of Knowledge
User #2: “The whole system is stacked against you to maximize how much you spend because they want to make more money.”
User #6 “For the most part, first-time home buyers do not know anything. I typically have to re-explain things
The preliminary user research to validate the problem that First-Time homebuyers are not prepared and//or well-informed of the home buying process. This lack of education and knowledge of the home-buying process can cause frustration, confusion, and stress. First-time homebuyers should be connected directly to resources that address barriers to home ownership, especially for younger generations and minoritized communities.
Based on market research, user insights, and user pain points, the goals of HomeStretch are to:
HomeStretch will be a web app that educates first-time homebuyers on the home-buying process by instructing users on each step of the home-buying process (including credit score, saving for a down payment, getting pre-approved for mortgage, etc). HomeStretch will provide resources to assist users in the home-buying process, such as down payment assistance, credit repair, etc. HomeStretch will allow users to track their progress. HomeStretch will allow users to store and access important information in one place.
Co.Lab has been an intense but extremely rewarding experience! I joined Co.Lab because I knew it would give me the tangible, hands-on experience needed to set myself apart during my product management job search. Over the past 4 weeks, I’ve learned the following:
