First Time Home Buyer Struggles

By in Prescott AZ with 0 Comments

In recent history, first-time home buyers once accounted for 40% of annual home sales in the United States according to NAR’s (National Association of Realtors) chief economist Lawrence Yun. However, 2019 has shown that the first-time home buyers of today still have not fully returned, making up only 31% of all homes sales thus far this year.

Because of this, home sales are still running at an annualized pace of 5 million, which means the housing market has essentially remained unchanged since 2000. This is odd because even though that number has remained the same, the US population has not.

From 2000 to 2019, the United States has seen growth of nearly 45 million people in population and 20 million in number of households. One would think that with a greater population and a greater number of households, that home sales would go up, but that hasn’t been the case because of first-time home buyers struggling to purchase.

So, why is it that first-time home buyers are having trouble breaking into the market? Well, there might be several things at fault here:

Student debt, which has tripled over the past decade. The population of those who have it are those who are younger, fresh out of college, in new careers, getting married possibly, and perhaps already have kids (or your general makeup of those whom are looking to buy a home for the first time). It’s hard to get qualified for a home loan when you aren’t making very much money, have to support a family, and have 50k plus in student loans over your head.

The real estate market is booming. What this means is affordability has gone down because home prices have risen fast. While interest rates have gone down and it takes a smaller share of monthly income to own, first-time buyers are struggling to find homes within their price range that meet their needs.

Starter home listings are in short supply. This is due to homebuilders focusing on expensive homes rather than affordable homes that millennials could buy, which makes it hard to purchase.

Not FHA Certified. A lot of homes that first-time home buyers could possibly afford are your condos and your town homes. However, many first-time home buyers also need to use an FHA loan, which cannot be used on these types of homes because they aren’t certified for them.

Credit Scores. Many millennials haven’t made the best decisions here with student loans (like mentioned above), credit cards, new cars, etc. Nowadays, a good credit score is crucial to purchase a home considering requirements to obtain a mortgage are tighter than ever because no one wants a repeat of the housing market crash.

These are just a few of the factors affecting first-time home buyers and we’re sure there are more because you never know what someone’s struggles may be, or why they’ve been having to rent all these years rather than purchase a home of their very own. Hopefully, as the economy continues to do well, so will those seeking to purchase a home, which will enable them to do so.

Are you looking to buy a home for the first time, but aren’t sure if you qualify or what you might qualify for? Call our office today at 928-771-1111. We work with some amazing lenders and it doesn’t cost a thing to talk to one, and see what your options might be!

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