It took three decades, but finally first time home buyers in this Country has fallen to its lowest percentage in three decades. Typically, according to National Association of Realtors (NAR) first time home buyers make up at least 40% of all home purchases.
Even though mortgage rates are still at record lows it is not enticing first time home buyers to continue the record of sales. Contradicting what the market says, these numbers are providing that even though with record low mortgage rates it is not enough to pursue buyers out of their rent. Even though rent is becoming like a mortgage payment for a lot of people it still makes more sense and is easier financially. The fact of the matter is that, it is not that these younger people do not want to buy at this time: according to Zillow 83% of people 23-34 are expecting to purchase a home.
Some of the attributes that are going to the lack of sales to first time home buyers is the amount the day to day life is costing now. Prior to this most recent decline debt was not as high as many individuals and couples are facing prior to even thinking about the purchase of a home. The increase in college tuition every year and incomes that are not matching that of the price in the housing market. Especially, in urban areas where people want to but the most, incomes are no where close to being where they need to be in order to allow these young people to buy and further the economy.
Furthermore, to accompany the idea of not having enough money to purchase (even though you can get a loan with no money down USDA), with rising rents, it is very difficult for the millinia’s to save any money for a down payment. With student debt rising, and income falling lending companies also have had to make changes to their protocol. Strict lending standards have been put in place, especially to those who are carrying thousands of dollars in student loan debt. Loan companies were interviewed and they stated that they will now be looking at student loan debt, just as if it were credit card debt.
One suggestion that was voiced in order to try to make a change to current protocols in order to encourage first time home buyers is to have less strict credit laws as well as introduce risk based pricing. By this it means depending on credit scores, debt, income ext. this is how a loan should be determined as well as overall price. If this idea were to come into fruition it would help first time home buyers get something within their price range and set them up for success in the repayment of it. Yes the loans may take longer to re-pay, but it would allow the premiums to fit with in the dynamic of the buyer.
The other factor is that these first time home buyers are competing against established people that are buying their second or third homes. When there is cash involved it tends to make the borrowing and purchasing process a bit easier.
There are odds against the first time home buyer but where there is a will there is a way. Please do not hesitate to call Omni Real Estate with any of your needs and we will always be there to help to find a solution!
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