First-Time Buyers Can't Afford Our Current Market
Good Monday Morning!
The first-time buyer housing market fuels the entire housing market. When the first-time buyers are not there, the entire market suffers. First-time buyers success in purchasing homes means that homeowners who purchased these homes years ago and have built equity can sell and move up to larger and typically more expensive housing, and in turn, those owning mid-range valued homes are able to move into upper-end homes. Without a solid first market that attracts first-time home buyers and allows those who have been renters, etc. to enter the housing market, the overall housing market and the national and local economies suffer. Right now, the first-time home buyer market is in rough shape. High home prices, higher mortgage interest rates, high inflation rates, and a poor national economy have all added to the fact that first-time home buyers just can't afford to enter the current housing market. This situation for first-time home buyers will not change until we see the economy rebound, home prices come down, inflation rates decline, and mortgage interest rates decline and stabilize. Right now, we are a long way from this scenario, and this indicates a potential tough road ahead for our national housing market. The following is a recent article from "Realtor.com" that talks about this situation.
The housing market appears bifurcated between repeat home buyers and first-time home buyers,’ NAR says
It has never been this challenging to be a first-time home buyer.
Over the last year, as home prices inched toward new highs and the 30-year mortgage rate stayed firmly above 7%, first-time buyers have been relegated to the sidelines, with the share of homes sold to them plunging to a 43-year low, according to a new report.
The 2024 Profile of Home Buyers and Sellers from the National Association of Realtors looked at transactions from July 2023 to June 2024.
The share of first-time home buyers during that period fell to 24% of all buyers, the NAR said, down from 32% the year before. The figure is now at the lowest point since the NAR began collecting the data in 1981.
Prior to the 2008 subprime-mortgage crisis, the share of first-time buyers was historically around 40%.
Part of the reason first-time buyers are having a tough time is the lack of affordable homes for sale, Jessica Lautz, the NAR’s deputy chief economist and vice president of research, told MarketWatch.
The median price of an existing home in September was $404,500, up 3% from the same period a year earlier, according to the NAR.
Although “there is pent-up demand among potential first-time buyers,” Lautz said, “for now, they are staying put renting or living with friends and family.”
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