With the affordability crunch difficult to overcome, first-time homebuyers are increasingly struggling, according to the 2018 Profile of Home Buyers and Sellers by the National Association of REALTORS® (NAR).
Thirty-three percent of buyers this year were buyers fresh to the market, the report shows—a decline from 34 percent the prior year, and now down for the third straight year.
Their challenges are cost-related, and overlap: college debt, the down payment and increasing mortgage rates. Forty percent of first-timers have $30,000 in student loans, according to the report, while 13 percent of all buyers are challenged by the down payment—half of which because of college debt obligations. The average first-timer paid 7 percent towards a purchase, but the average buyer in general put down 13 percent—a figure not seen since 2005.
“Low inventory, rising interest rates and student loan debt are all factors contributing to the suppression of first-time homebuyers,” says Lawrence Yun, chief economist at NAR. “With the lower end of the housing market—smaller, moderately-priced homes—seeing the worst of the inventory shortage, first-time homebuyers who want to enter the market are having difficulty finding a home they can afford.
“Even with a thriving economy and an abundance of job opportunities in many markets, monthly student loan payments coupled with sky-high rents and rising home prices make it exceedingly difficult for potential buyers to put aside savings for a down payment,” Yun says.
Another critical homebuyer group is single women, who accounted for 18 percent of all buyers this year, behind the buyer majority (63 percent) who are married, the report shows. In third were the 9 percent of buyers who are single men, who bought more expensive homes, at a median $215,000, compared to the $189,000 median for single women.
For buyers as a whole, an agent is their go-to for support in the transaction. Despite 95 percent of buyers house-hunting online, 86 percent enlisted a REALTOR® in their search, and 87 percent had an agent help them in their purchase. Ninety percent of buyers would “definitely” or “probably” use their agent again, or recommend him or her to others.
An agent is equally important on the seller side, the report shows. For-sale-by-owner sales were just 7 percent of all transactions this year—the lowest ever recorded in the report, highlighting the importance of a REALTOR® when selling.
“With inventory so low, buyers are relying on their agent’s knowledge of markets and neighborhoods to find listings, rather than relying only on online searches,” says NAR President Elizabeth Mendenhall. “A REALTOR® has years of experience, generating insight and expertise that can help buyers navigate a tight market, where buyers are forced to move fast and make competitive bids in order to get their dream home.”
Breaking down buyers and sellers:
For more information, please visit www.nar.realtor.