The National Association of Realtors recently conducted an annual survey and the housing trend shows that today, first-time homebuyers only account one third of all purchases, which is the lowest percentage since 1987. The survey involved asking random people who have bought a home from July 2013 to June 2014.
According to Lawrence Yun, NAR Chief Economist, it hasn’t anymore as easy as it used to be for the young group to buy a home. “Rising rents and repaying student loan debt makes saving for a down payment more difficult, especially for young adults who’ve experienced limited job prospects and flat wage growth since entering the work force,” Yun said. “Adding more bumps in the road is that those finally in a position to buy have had to overcome low inventory levels in their price range, competition from investors, tight credit conditions and high mortgage insurance premiums.”
As the job market improves, salary should also increase however, first-time homebuyers find it difficult to get a mortgage than what they actually expected.
“Less stringent credit standards and mortgage insurance premiums commensurate with current buyer risk profiles are needed to boost first-time buyer participation, especially with interest rates likely rising in upcoming years,” Yun added.
First-time homebuyers’ median age was 32 with a median income of $68,300. They typically buy a 1,570-square-feet property sold for $169,000. On the other hand, a second-time homebuyer or a repeat buyer was 53 years old with a salary of $95,000. Eventually, these buyers bought bigger and more expensive properties.
As for home sellers, the current median age is now 54 from 46 years old in 2009. Plus, they live in their house for an average of one decade.
“Faster price appreciation this past year finally allowed more previously stuck homeowners with little or no equity the ability to sell after waiting the last few years,” Yun said.
If the number of first-time homebuyers continues to drop, a lot of the current homeowners might find it difficult to move into bigger and more expensive homes, as selling their current property will be tough.