Recently we’ve seen sales go up, foreclosures and mortgage rates go down and lending standards begin to ease, yet something is still not right in the real estate market. Despite these recent improvements, a new study has found that first time buyers’ market share has dropped to a 30 year low, leaving many to wonder what needs to change before the market can return to full swing.
According to an annual homebuyer survey from the National Association of Realtors (NAR), the number of first-time homebuyers has continued to drop this year – now reaching its lowest point in over three decades. As reported by the study, first-time homebuyers combined for a total of 33% of the market share this year, down 5% from the previous year and 7% lower than the average dating back to 1981.
What’s holding these buyers back? According to the survey, over half the respondents stated that the mortgage process – both the application and approval – was more difficult than they had anticipated.
Many would-be buyers are also turned away due to sticker shock. Following the all-cash investor fueled run-ups of last year, home prices have remained higher than many buyers can afford. Rents continue to rise as well, and while some believe this will help convert renters into buyers, for some this will prolong saving the necessary funds for a down payment.
For some though, the choice to rent is simply that – a choice. Renting has become a choice rather than a necessity, providing the flexibility that many renters desire. On top of this, renting no longer carries the same stigma is once did, making it a more appealing choice for both first-time buyers and returning ones.
What do you think is holding back first-time buyers? What needs to change to get them back on the market?