DEC 12, 2024
The landscape of home buying is changing, and the latest statistics show a notable shift. According to the National Association of Realtors (NAR), first-time home buyers are now at their lowest percentage of all home purchases since NAR began tracking the statistic in 1981.
Between July 2023 and June 2024, only 24% of buyers were first-time home buyers, down from 32% the previous year. This drop is largely due to the current challenges in the housing market, such as high home prices, rising mortgage interest rates, and limited housing inventory.
First-time buyers are feeling the pressure more than ever. As mortgage rates remain high, along with soaring home prices, many potential buyers are delaying their home purchase or opting for larger down payments.
The average age of a first-time buyer has increased, now reaching 38 years old, compared to just 35 years old the year before. These buyers are also experiencing a significant increase in their median household income, now at $97,000, which is a $26,000 jump from just two years ago.
However, without the benefit of home equity to assist with a down payment, many first-time buyers are making an average down payment of 9%, which, while below the typical 20% benchmark, is the highest for first-time buyers since 1997. In fact, 69% of first-time buyers are relying on savings, and a notable 25% are receiving financial help from friends and family. An all-time high of 7% are even using inheritance money to make their purchase.
In contrast, repeat home buyers are benefiting from the equity they’ve built in their current homes, allowing them to make larger down payments or even purchase homes outright with cash. The median income for repeat buyers has increased to $114,300, and their average down payment has reached 23%, the highest since 2003. As a result, 26% of repeat buyers are able to pay for their homes in full with cash, which is making the market more competitive for others.
Another significant trend in the housing market is the rise of multi-generational living. As homes become increasingly expensive, 17% of home buyers are now opting for homes that can accommodate multiple generations. Reasons for this shift include the desire to save money (36%), care for aging parents (25%), or house adult children who are moving back in (21%). Some families are also simply choosing multi-generational living as a way to create a stronger family bond and share living expenses.
While the market has posed challenges for many buyers, there is some good news on the horizon. Mortgage rates have begun to decline, providing potential buyers with more favorable terms. Additionally, housing inventory has seen an uptick, reaching its highest point in five years, which could signal more opportunities for buyers in the coming months.
For anyone considering purchasing a home, whether for the first time or as a repeat buyer, staying informed and prepared for these market shifts can make all the difference. As housing prices remain high, buyers should be strategic, consider different financing options, and understand the evolving trends in the housing market. The changing dynamics of home buying, from the increase in multi-generational living to the growing age of home buyers, highlight the importance of being adaptable in today’s real estate landscape.
Disclaimer: This content is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice.
