Veterans Feel Way Better About Homebuying & Finances Than Civilians, Survey Shows

The headwinds of high home prices, rising mortgage rates and low inventory keep holding back the housing market, but would-be Veteran buyers can take heart – they’re in way better financial shape than their civilian counterparts.

Compared to Veterans, civilians feel less financially stable, less optimistic about their finances and less capable of securing a home loan, according to Veterans United Home Loans’ most recent Veteran Homebuyer Report, a quarterly national survey of Veterans, service members and civilians who intend to buy homes in the next three years.

Amid a tough economic stretch, there’s a stark difference between Veterans and civilians when it comes to financial optimism and aptitude.

This latest Veterans United survey found:

• Compared to a year ago, more Veterans feel they’re better off financially (52%) than civilians (37%)
• 58% of Veterans expect to be better off financially next year, compared to 53% of civilians
• More Veterans say buying a home feels within reach (56%) than civilians (48%)
• 50% of Veterans feel at ease about their finances, compared to 31% of civilians
• More Veterans feel like they can secure a home loan right now (52%) than civilians (44%)

“The Veteran-civilian financial optimism gap is real, and this survey makes clear that buying a home and building a stronger financial future feels much more within reach for Veterans right now,” said Chris Birk, vice president of mortgage insight at Veterans United, the nation’s largest VA lender. “These findings also speak to how prepared and well-qualified Veteran and military homebuyers are even in this challenging market.”

The survey also suggests Veteran and military buyers are becoming more comfortable with and accepting of today’s higher mortgage rates, even if they’re still far above their ideal rate.

The Veteran-Civilian Financial Optimism Gap

Civilians are struggling to keep up financially with Veterans. Thirty percent of civilians say they’re worse off financially than they were a year ago, compared to only 20% of Veterans.

Most civilians expect things to perk up, but Veterans are more optimistic about their finances – over the next year, 25% of Veterans think they’ll be much better off, compared to just 18% of civilians.

Civilians also have a more pessimistic outlook of their financial plan, experience more stress and pressure around their financial situation, and feel less job security than Veterans.

Part of what explains the optimism gap is that Veterans tend to have higher average household incomes and asset levels than civilians. They’re also much more likely to be homeowners.

Among Veterans, there’s a growing sense that the housing market is leveling off – not getting worse, but not yet tipping in their favor.

And while they’re more optimistic than civilians, there are still areas of concern and frustration for some Veteran and military buyers, which is borne out in part by some subtle behavioral changes in the second quarter of this year compared for the first quarter:

Still, Veterans remain motivated to buy their first or next home, even if they’re increasingly in no rush to make a decision, given the slow-moving economic trendlines.

There’s also been a shift in how Veterans and service members think about the biggest barriers to homebuying, as a new sense of normal sets in regarding the mortgage rate environment.

More Veterans Think Rates Have Peaked

Rising home prices have surpassed high interest rates as the top barrier to homebuying for Veterans and service members, with more Veterans feeling like rates might have reached their peak.

Compared to the first quarter, more Veterans expect rates to decline over the next year, while the percentage of Veterans who expect rates to rise dropped nearly 10 points. In all, 42% of Veterans think rates will stay the same or decline over the next year, up from 31% in the first quarter.

The survey also found would-be military buyers are checking mortgage rates less frequently, in part because rates haven’t changed drastically in recent months. There’s also an emerging acceptance of the rate environment and recognition that small swings won’t ultimately affect buying power in big ways.

“While they certainly don’t like where rates are, many Veterans have basically come to terms with the reality of today’s rates,” Birk said. “The challenge is that rising or stagnant home prices coupled with this rate environment continues to squeeze budgets and force some Veterans and service members to make tough choices.”

The Trouble with Trade-Offs

Most Veterans realize that buying a home can require making trade-offs. They’re open to compromise and changing plans, especially in a housing market like this. But even then, many are struggling to make it work, feeling like they’ve exhausted what little wiggle room they have.

While waiting to buy is always an option, more Veterans indicated that waiting felt like a last resort rather than an active choice. Many buyers are also reluctant to settle for a cheaper house or a more affordable area.

Other trade-offs like increasing their housing budget or selling an existent home and renting don’t feel feasible or financially savvy.

Veterans Expect Economy to Dip

Facing a host of mixed signals, many Veterans are left wondering whether the economy has turned a corner and avoided a recession or is headed for a downturn.

Some of that uncertainty translates to more pessimism about where the economy will be a year from now.

Fewer Veterans think they’ll be better off financially a year from now (58%) than they did in the first quarter (67%), while more Veterans now expect the economy to get worse in the coming year.

Perhaps unsurprisingly, interest rates and home prices continue to play a key role in shaping Veterans’ perception of the health of the economy.

Despite the growing pessimism, most Veterans remain optimistic about homebuying and their personal financial trajectories. They also recognize that improvements like home price declines and inventory increases are likely to be slow moving.

There’s an overarching sense that key factors (home prices, rates, inflation) aren’t getting worse. But that doesn’t mean they’re good enough yet to spur widespread movement in the housing market for would-be Veteran and military buyers.

Methodology

On behalf of Veterans United, data and research firm Sparketing conducted an online survey of about 900 Veterans, service members and civilians in late May and early June 2023.

We surveyed service members from both the active and Reserve components, as well as Veterans.

For the purpose of this survey, active duty military are full-time members of the Armed Forces. The Reserve component includes drilling National Guardsmen and Reservists. Veterans are military members who have been discharged or retired from the service and no longer serve in uniform.

Past Reports

Data and insights for yearly Veteran Homebuyer Reports vary year to year to reflect the ever-changing environment impacting home purchases and the Veteran and military community. Study methodology and third-party research are also subject to change. Below are links to past reports:

• 2021 Veteran Homebuyer Report
• 2022 Veteran Homebuyer Report