Here’s a troubling trend for the housing market: First-time buyers now account for only one-third of all home purchases, the lowest share since 1987.
That’s according to an annual survey conducted by the National Association of Realtors, which questioned a random sample of people who purchased homes between July 2013 and June 2014.
It’s not just not as easy as it used to be for young adults to purchase a home, said NAR Chief Economist Lawrence Yun.
“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,” he 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.”
Wages should go up as the job market improves, but first-time buyers report that getting a mortgage is a lot harder than they 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 said.
The median age of first-time buyers was 31, and their median income was $68,300. Their typical purchase: a 1,570-square foot home costing $169,000.
The typical repeat buyer, by contrast, was 53, with an income of $95,000. Repeat buyers bought bigger and more expensive homes.
Home sellers, meanwhile, are getting older: 54 on average now vs. 46 back in 2009. The typical seller has been in his or her house for 10 years — a new high.
“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.
But if the share of first-time homebuyers continues to shrink, many homeowners who would like to move up to a more expensive house may find it harder to sell their current home.
