By Sarah Macklin 
A new study has revealed that only 14% of Americans are aware that the median home prices ranges between $400,000 and $499,000 and just 12% know the current interest rate hovers around 7%. But such basic knowledge should be widespread.
New research from Real Estate Witch has shown that, when asked what the current median home price is, only 14% of Americans know that the average house price in America is $400k to $499k. Almost a quarter guessed $200k to $299k and another quarter $300k to $399k. Real Estate Witch is an online publication that connects readers with expert real estate advice, owned by Clever Real Estate.
And it’s not just average prices that they guessed incorrectly; only 12% knew that interest rates currently sit at 7% and 62% thought you had to put down a deposit of at least 20% of the total house price.
The research shows that Americans may be wildly misinformed and out of touch with such real estate data.
Despite underestimating current home prices, 76% of non-homeowners are concerned about rising home prices. A huge 73% don’t think homes are affordable right now, yet 60% actually underestimate the median home sale price.
In addition, just 12% of Americans know the current interest rate for a 30-year mortgage hovers around 7%. Nearly half (43%) believe the rate is higher, with a whopping 1 in 4 (26%) believing it exceeds 10%. The last time rates reached 10% was more than 30 years ago in 1990.
Although a third of non-homeowners (31%) say they’re knowledgeable about the home-buying process and 43% say they’re knowledgeable about mortgages, 62% wrongly think it’s required to put down 20% on a home. In fact, 21% believe buyers need to put down more than 20%.
Buyers are required to pay private mortgage insurance (PMI) if they don’t put 20% down. However, 85% of Americans don’t know what PMI is — including 83% of current homeowners.
Further, about one-third of Americans (32%) say a credit score of at least 700 is necessary to purchase a home. In reality, buyers can qualify for a conventional loan with a score of 620.
The seller typically pays agent commission for the buyer, but 62% of Americans think the buyer pays their agent’s commission. This misunderstanding could be why 65% of Americans wrongly think buyers can save money by not working with a real estate agent.
With misinformation running amok, it’s not surprising that 83% of homeowners were surprised by parts of the home-buying process — 65% had to adjust their budget, and 63% had to adjust their priorities.
So how can such misinformation be corrected? It may be that more people need educating in the process of buying a home or selling a home. They may also need more education in schooling about finances and mortgages.
Jeremy Davidson