First-time homebuyer share at record low, age at record high

"Before the 2008 housing crisis, first-time buyers typically made up 40% of the market. Now, with mortgage rates averaging 6% to 6.69% and home prices at record highs, new buyers are finding it increasingly difficult to make their mark. The median age of first-time buyers rose to 40 the highest ever recorded compared with the late 20s median from the 1980s. The historically low share of first-time buyers underscores the real-world consequences of a housing market starved for affordable inventory, said Jessica Lautz, NAR deputy chief economist and vice president of research."

"We're seeing buyers with significant housing equity making larger down payments and all-cash offers, while first-time buyers continue to struggle to enter the market. The report found that first-time buyers made a typical down payment of 10%, matching the highest share recorded since 1989. Repeat buyers put down a median of 23%, the highest since 2003. Among all buyers, 30% paid cash continuing an all-time high for all-cash purchases. Overall, 92% of first-time buyers used financing compared with 70% of repeat buyers. The median share financed was 90% for first-time buyers and 77% for repeat buyers."

"Among first-time buyers, 59% used personal savings and 26% drew from financial assets such as 401(k)s or stocks for their down payments. For 21% of all buyers, the main reason for purchasing was the desire to own a home of their own a figure that jumped to 64% among first-time buyers. Forty-five percent said the timing felt right, while 20% said they had little choice but to buy when they did."

First-time buyer share has contracted by about 50% since 2007, dropping from roughly 40% before the 2008 crisis to a historically low level. The median age of first-time buyers rose to 40, compared with late-20s medians in the 1980s. Mortgage rates averaging about 6%–6.69% and record-high home prices have constrained entry for new buyers. Repeat and equity-rich buyers are making larger down payments and all-cash offers, while first-time buyers rely more on financing and personal savings. First-time buyers typically put down 10% and financed a median 90% of purchase prices.

Read at www.housingwire.com