First time home buyers are a vital part of the housing market in the United States, and according to recent reports, people buying their very first home is at a historic low point. The National Association of Realtor’s 2017 Home Buyers and Sellers Survey reported that first time home buyers has decreased 35% this year; a number not seen since 1981. This slump in starter home purchases has been attributed to rising home prices and lack of homes on the market, and could have major implications for the economy.
Why First Time Buyers are Important
Traditionally, first time home buyers account for 38 percent of annual home sales. This drop, caused an overall drag on the entire economy and a slowdown in the recovery of the housing market that started to see upward movement in 2011. The first time buyers help keep the entire housing market flowing by purchasing entry-level homes which then allows current homeowners to “trade up” to bigger, more expensive homes. It is in this way that first time home buyers influence the overall housing inventory and dictate home prices.
Will it Be Easier to Buy a Home in 2018?
In the housing boom that lead up to 2007, homeownership was soaring, but was brought to a near standstill thanks to the financial crisis. The total supply of available homes for sales has decreased dramatically which in turn has drove the price of homes up. While this is great news for current home owners, it’s not so fantastic for individuals or couples looking to purchase their first house. On the upside, FHA loans and other loan programs with low-down payment guidelines are increasing, allowing new home buyers to purchase their home with as little as 3.5% down and some even offering 100% financing. Realtors and housing experts are also seeing a slowdown in the increase in home prices and expect it to level off, which will provide an abundance of more affordable housing for first time home buyers.
The positive news is that experts expect the number of renters turned homeowners to increase thanks to drops in unemployment rates and as the number of new homes being built continues to rise. As a first time home buyer, it pays to do your research, as well as, have a few experts in your corner. An experience real estate agent can make the process smoother and help identify properties that may not be on the market yet. Knowing a good mortgage broker isn’t a bad idea either, since they can help you get together all the information you need to get financing and help lock you into a rate that will make your mortgage payments more affordable.