As home prices continue to edge upward, the client base being impacted most is that of the first-time buyer. Agents representing this base finds a clientele pulled down by rising student debt, which is dragging them down.
According to a CNBC report, the share of sales to first-time buyers fell to 34 percent in 2017, down from 35 percent in 2016, according to the National Association of REALTORS®’ annual Profile of Home Buyers and Sellers. That is the fourth-lowest share in the survey’s 36-year history. First-time buyers historically make up closer to 40 percent of homebuyers.
According to the survey, more than half of first-time buyers owned at least $25,000, which hampered their ability to save for a down payment. NAR Chief Economist Lawrence Yun also noted other trends in the industry as a factor.
“The dreams of many aspiring first-time buyers were unfortunately dimmed over the past year by persistent inventory shortages, which undercut their ability to become homeowners.”
The news comes just as first-time homebuyers were starting to move back into the market. Yun noted that 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.”
Home prices hit yet another new peak in August, at $282,000, according to Black Knight Financial Services. That happened after 64-consecutive months of annual home-price appreciation. Monthly gains, however, have been falling for the last five months.
On a bright spot, fewer buyers responded that the mortgage application and approval process was more difficult than they had expected. The process is easier — unfortunately mortgage interest rates are now rising, with agents finding many potential buyers are staying on the sidelines.