Young people still want to be homeowners, they’re just having trouble saving a downpayment and affording today’s homes. Younger buyers are important to existing homeowners. First-time homebuyers allow you to sell your starter home and buy a move-up home.
Historically, about 40 percent of homebuyers are first-timers. In today’s market that number has fallen to 33 percent, a three-decade low point, according to the 2014 Profile of Home Buyers and Sellers report done by the National Association of Realtors.
“Rising rents and repaying student loan debt makes saving for a downpayment more difficult, especially for young adults who’ve experienced limited job prospects and flat wage growth since entering the workforce,” NAR Chief Economist Lawrence Yun explains.
“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,” he adds.
Where They Get Downpayments
First-time home buyers used a variety of resources for their loan downpayments:
- 81% tapped savings.
- 26% received a gift from a friend or relative – most likely their parents.
- 10% sold stocks or bonds or tapped into a 401(k) fund.
- 6% received a loan from a relative or friend.
There are lending rules about buying with a downpayment funded by a gift or loan. If you’re getting help to buy a home, or you want to help a relative buy a home, contact me and I’ll walk you through the best way to handle this issue.
|First-Time Buyers||Repeat Buyers|
|Home Size||1,570 sq. ft.||2,030 sq. ft.|
Source: NAR Profile of Home Buyers and Sellers