First-time homebuyers play a big role in the housing market, but where are they in the scheme of the housing recovery?
Twenty-eight percent – that was the share of first-time homebuyers in November, according to NAR’s latest existing-home sales report.
Far below the traditional level of 40 percent, the share of first-time homebuyers has been hammered in recent years by the economic downturn, tighter lending standards and competition from investors – which is a shame, given what an important role first-timers play in the housing market.
So with that in mind, here are some important details to know about first-time homebuyers, as we head into 2014:
1. Young’ns – First-time homebuyers were both younger and less affluent than repeat buyers. Compared to repeat buyers, who were on average 52 years old and earned $96,000, first-time homebuyers were 31 (unchanged from 2012) and had a median income of $67,400.
2. Small and Compact – Unsurprisingly, first-time homebuyers also purchased homes that were smaller than those bought by repeat buyers, with them choosing homes that were 1,670 square feet and costing $170,000 (compared to 2,060 square feet and $240,000 for repeat buyers).
3. Homeownership is Still Attractive – One promising trend is that homeownership is still valuable to first-time buyers. Even with all the trials and tribulations that the housing market has experienced since 2008, 60 percent of first-time buyers purchased their home out of a simple desire to own.
4. Down Payment Resourcefulness – First-time homebuyers used a variety of methods to pay for their purchase. Seventy-eight percent, for instance, utilized savings, while 27 percent used a gift from a friend or relative; meanwhile, 7 percent received a family/friend loan, 9 percent sold stocks/bonds and 8 percent tapped into a 401(k).
5. Student Loan Quagmire – Finally, as we’ve noted before, student loan debt is having a definite impact on the housing market, and it’s especially potent among first-time homebuyers; 54 percent, in fact, said that student loan expenses had delayed the necessary savings for a down payment.