Decrease in First Time Homebuyers
The tough housing market poses struggles for those in search of their first home. First-time buyers make up just one-third (33%) of all housing purchases, according to an annual survey by the National Association of Realtors. This number is down from 38% a year ago. The survey looked at a random selection of more than 6,500 people who purchased a primary residence between July 2013 and June 2014. The average age of first-time buyers was 31, purchasing homes around the $169,000 price range. Repeat buyers averaged an age of 53, and home sellers averaged 54 years of age.
Often times, first-time homebuyers are young adults; with the added stressors of student loans, a poor job market, flat wage growth, and rising rents, saving up for a down payment and buying a home just doesn’t seem to be in the cards for the near future. Even those that have made it to the point of being able to buy their first home are facing trouble with low housing inventory in their price range, high mortgage insurance premiums, tight credit conditions and strict lending standards, and investor competition. Lenders are demanding higher credit scores, and certain government loans (such as the FHA loans) have raised the fees tacked on to monthly mortgage payments, which discourages first-time buyers from taking out a loan and buying a home.
With interest rates predicted to increase during the next few years, the number of first-time homebuyers may decrease even more. This poses a problem for the future of the housing market – if the amount of first-time home buyers continues to dwindle, homeowners who decide to put their home on the market will find it more difficult to make a sale, and the housing market will suffer.