The National Association of Realtors® has just released its latest annual Buyer and Seller survey. An infographic showing the highlights of the report is below. Standing out is the fact that the share of first–time buyers declined for the third consecutive year and remained at its lowest point in nearly three decades as the overall strengthening pace of home sales over the past year was driven more by repeat buyers with dual incomes.
Lawrence Yun, NAR chief economist, says the housing recovery’s missing link continues to be the absence of first–time buyers. “There are several reasons why there should be more first–time buyers reaching the market, including persistently low mortgage rates, healthy job prospects for those college–educated, and the fact that renting is becoming more unaffordable in many areas,” he said. “Unfortunately, there are just as many high hurdles slowing first–time buyers down. Increasing rents and home prices are impeding their ability to save for a down payment, there’s scarce inventory for new and existing–homes in their price range, and it’s still too difficult for some to get a mortgage.”
Yun says this year’s survey perhaps offers additional clues to why fewer first–time buyers are reaching the market. “First–time buyers reported that debt (all forms) delayed saving for a down payment for a median of three years, and among the 25 percent who said saving was the most difficult task, a majority (58 percent) said student loans delayed saving,” he said. “With a median amount of student loan debt for all buyers at $25,000, it’s likely some younger households with even higher levels of debt can’t save for an adequate down payment or have decided to delay buying until their debt is at more comfortable levels.”
What it doesn’t address directly in the report is exactly who most of these first time homebuyers are – Millennials. Those currently between the ages of 25-34 make up the largest group of all homebuyers at 32%, and represent 68% of potential first time home buyers. The good news for Millennials is that wages are starting to rise and the employment situation is improving. These are cyclical factors that have made it less of a first-time homebuyer market but will eventually wear off. However, they may take some time to wear off…
