FOX Business’ Katrina Campins talks about the growing demand for mortgage refinancing, who will benefit, and the impact on the real estate and housing sector.
The age of first-time homebuyers has reached a new high, highlighting just how high the financial hurdles those looking to enter the housing market face.
The median age of first-time homebuyers has reached 38 years old, according to the National Association of Realtors (NAR) annual survey of buyers and sellers. This is up from 35 last year and is a significant increase from the 1980s, when the typical first-time homebuyer was in his or her late 20s.
This record was achieved despite household incomes for first-time homebuyers increasing by $26,000 over the past two years, further illustrating the difficulty of entering the housing market.
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Overall, the age of first-time and repeat buyers has reached an all-time high, with the median age of buyers reaching a peak of 56, up from 49 last year, according to NAR. The typical repeat buyer is also 61 years old, up from 58 last year.
“Older first-time buyers are saving for long periods of time in a high-inflation economy while paying off other debts such as student loans, car payments and credit card debt,” said Jessica Lautz, NAR’s principal deputy economist. It’s highly likely that he had to.” he told FOX Business. “While they may have been actively searching for properties to purchase, many offers fell through as all-cash buyers won bids on homes.”
NAR’s study covers transactions completed between July 2023 and June 2024, providing insight into detailed buying and selling behavior. The data also showed that apart from older homebuyers, the number of first-time homebuyers hit an all-time low.
Patchogue, New York: A for sale sign is posted in front of a home in Patchogue, New York on June 1, 2024. (Steve Forst/Newsday RM via Getty Images/Getty Images)
The proportion of people who will buy a home for the first time this year will be 24% between July 2023 and June 2024, down from 32% a year ago. This was the lowest percentage of homebuyers since NAR began collecting this data in 1981.
For comparison, before the housing market crashed in 2008, 40% of first-time buyers was historically the norm, according to NAR.
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This “speaks to how severely the lack of housing inventory and housing affordability is impacting young potential homebuyers,” Lautz said.
Lautz said potential first-time buyers in particular “likely had difficulty even considering saving for a down payment, given inflation, rent, student loans, and other loan payments.” he claimed.
A sign posted in front of a home for sale in San Rafael, California on August 7, 2024. (Justin Sullivan/Getty Images/Getty Images)
Joel Varner, senior economist at Realtor.com, highlighted the challenges faced by first-time homebuyers, saying that “in an environment of high mortgage rates, We are currently in a disadvantageous situation.”
“If you don’t already own a home and can receive cash when it’s sold,[first-time home buyers]can only use the money they have for the down payment, so it takes a lot of money to buy a home. You’re going to have to take out a loan.”It’s the same house as people who can sell their property and live in it,” Varner said.
Repeat buyers have the advantage of being able to enter the market with a large down payment due to recent increases in home equity.
A “For Sale” sign in front of a home in San Jose, California, USA on Thursday, September 5, 2024. (David Paul Morris/Bloomberg via Getty Images/Getty Images)
These higher down payments can help offset your mortgage payments, as mortgage interest rates can be higher. This year’s down payments are the highest since 2003, according to NAR data.
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It has also grown for first-time buyers who must compete effectively with “more substantial offers among all-cash buyers.” According to the data, typical down payments reached 9%, the highest share since 1997.
