Low housing supply ousts first-home buyers
Sales to first-time home buyers receded to 34% in 2017.
A record-low level of housing supply and increasing price growth across the United States is restricting the number of first-home buyers entering the real estate marketplace, according to the latest research report.
The National Association of Realtors’ (NAR) 2017 Profile of Home Buyers and Sellers report found the share of sales to first-time home buyers retreated slightly to 34% this year from 35% in 2016, the fourth lowest share since 1981. In the NAR survey’s history, the long-term average of first-time buyer transactions is 39%.
The report suggests repeat buyers were also found to be returning to the market this year.
Sales of new build single-family houses increased by almost one fifth in September, peaking at an annual seasonally adjusted rate of 667,000 units, which is the highest sales rate since October 2007.
However, the estimate of new houses for sale at the end of September was 279,000, representing a five month supply at the current sales rate. This is the lowest recorded level of supply since March 2017.
National real estate data for August revealed existing-home sales fell for the fourth time in five months, while sales pace in the South and West regions lost steam after making modest gains in July. Despite high numbers of building permits for private dwellings in August, housing starts and completions fell month-on-month.
“The dreams of many aspiring first-time buyers were dimmed over the past year by persistent inventory shortages, which undercut their ability to become homeowners,” NAR chief economist Lawrence Yun said.
“With the lower end of the market seeing the worst of the supply crunch, house hunters faced mounting odds in finding their first home. Multiple offers were a common occurrence, investors paying in cash had the upper hand, and prices kept climbing, which yanked home-ownership out of reach for countless would-be buyers.”
“Solid economic conditions and millennials in their prime buying years should be translating to a lot more sales to first-timers, but the unfortunate reality is that the nation’s home-ownership rate will remain suppressed until entry-level supply conditions increase enough to improve overall affordability.”
First-time buyers in Seattle can take advantage of a new startup that assists them in making down payments to buy a new home. Loans are provided on the basis you rent out a room in your new pad to pay back the debt.
The startup may provide a possible solution for the staggering proportion of young non-homeowners who suggest their hefty student loan debts are the primary reason they have delayed purchasing their first home.
A recent finder.com study found Americans are borrowing $288 billion from friends and family each year. Just over one quarter (26%) of the total loaned funds were put toward a down payment on a home.