Joe's Blog

First-Time Homebuyer Trends in an Ever-Changing Market

According to this CNN Money article, the percentage of homes sold to first-time homebuyers dropped from an average 40 percent to 33 percent last year, a three-decade low. 

Most first-time homebuyers fall under the young adults age group, and there are many factors that could be attributed to this decline. The Zanola team has started to see this decline in the PRIZM data collected for our research studies that follow move-in and move-out rates of residents in demographics categories across the board.

We spoke to our friends at USA Mortgage’s Mueller Mortgage Team to get some input from industry experts who deal directly with first-time homebuyers on a daily basis on reasons for this decline. Right now, the home buying market is comprised of people who bought when the 2007-09 federal tax credits were available for first-time homebuyers. Because of these credits, many people bought houses before they would have normally, taking a huge swath of people off the market that would have been buying now, in this current market.

The article also cites the weight and responsibility of student loans as a potential holdback for first-time homebuyers. Student loan payments can take a huge percentage of disposable income for a new grad with a starter income. The parents of first-time buyers are also less likely to encourage home buying as they would in the past, and are less inclined or able to kick in on the down payment. Additionally, another roadblock for first-time homebuyers is ever-rising home prices.

Our research studies for clients across the country (such as the city of Mt. Vernon, Illinois and Duenke Family Properties) have found the need for new homes developments, ripe for first-time homebuyers. The Mueller team and Zanola Company’s advice for potential first-time homebuyers to make home ownership possible is to keep on top of credit and student loans to ensure a high credit store once they are in a place where they are financially able to buy.