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First Time Home Buyers Feel The Pinch
Dated: November 3 2017
First Time Home Buyers Feel the Pinch
As the economy and wages improved in 2017, first-time homebuyers were finally moving back into the market — until that turned around again.
Sky-high home prices and few low-priced listings took their toll on these buyers yet again. For those who did buy, they had to pony up and pay more money for less of a house.
The share of sales to first-time buyers fell to 34 percent in 2017, down from 35 percent in 2016, according to the National Association of Realtors' annual Profile of Home Buyers and Sellers. That is the fourth-lowest share in the survey's 36-year history. First-time buyers historically make up closer to 40 percent of homebuyers.
The drop in buyers is, in part, due to a rise in student-loan debt. For those who did buy, 41 percent said they had student debt, up from 40 percent in 2016. The average amount of debt also increased to $29,000 from $26,000 last year.
More than half of buyers owed at least $25,000, and a sizable share said that debt delayed their saving for a down payment. And that down payment had to be larger, given the lack of affordable homes for sale.
"The dreams of many aspiring first-time buyers were unfortunately dimmed over the past year by persistent inventory shortages, which undercut their ability to become homeowners," said Realtors' chief economist Lawrence Yun.
"With the lower end of the market seeing the worst of the supply crunch, house hunters faced mounting odds in finding their first home," he said. "Multiple offers were a common occurrence, investors paying in cash had the upper hand, and prices kept climbing, which yanked home ownership out of reach for countless would-be buyers."