Why Are First-Time Homebuyers Getting Older? Here's What You Need to Know
The age of first-time homebuyers has hit an all-time high of 38 years old and for many the idea of owning a home seems out of reach.
So what’s Behind the affordability crisis?
Contrary to what many might think, the primary reason for is not merely about saving for a down payment but rather the broader impact of affordability initiatives put in place during the 1980’s. In the past, a homebuyer needed 20% to 30% down to purchase a home and mortgages generally didn’t last for more than 10 years. For a $100,000 house, that meant saving $20,000 to $30,000 and large monthly payments to payoff the house quickly.
However, with modern affordability programs, down payments have dropped to as low as 3% to 5%, or even 0%. This means the same home could be purchased with just $3,000 to $5,000 down. While these affordability programs have lowered the barrier to entry, it has also driven up home prices significantly.
The reduced upfront costs and ease of credit standards have increased demand, pushing prices higher and adding to the financial strain. The market now is at a point of unaffordability as a result of a lower barrier of entry and higher monthly payments which produce higher prices as well as increased expenses such as insurance and property taxes.
Balancing Accessibility and Affordability
The market is currently grappling with the challenge of balancing affordability and accessibility. While lower down payments make homeownership more attainable, the ripple effect on overall costs makes affordability a persistent issue. The industry is still searching for a viable solution to this balancing act.
What Does This Mean for You?
If you’re considering buying a home, it’s essential to be strategic. Evaluating market conditions, exploring all financing options, and understanding the long-term costs of homeownership are critical steps. Homeownership is still the best way to build wealth and everyone needs a place to live. If you’re thinking about buying a home, they are generally not going to get any cheaper.
Ready to start your homebuying journey? At Real Estate Connection, we’re here to make your dream of homeownership a reality. Contact us today to explore your options, get personalized guidance, and take the first step toward your new home. Let’s get started! Click the button below.