5 Important Reasons Why First-Time Buyers Have Been Buying More Homes Lately
First-time Buyers Rise To The Occasion
Ask any first-time home buyer about their home search, and you will probably hear that the quest is not easy. It is tough saving up for a home. Five important reasons why first-time buyers have been buying homes recently. NSH Mortgage has the knowledge and tools to help you out with the recent changes in today’s housing market with first-time buyers looking for a good home.
Landing a mortgage at the desired rate can be tricky. Moreover, beating out contenders to the right home requires good timing. Indeed, fresh numbers show that first-timers are not giving up.
In fact, they are buying more homes than they have in 12 years which is a good sign for the market. Alternatively, it may encourage others to pursue their dreams of owning. If you are eager to buy your first home, the good and bad news is that you are not alone. But with careful planning and the right approach, you will stand a better chance of buying your first home sooner.
What The Research Found
A new report by Genworth Mortgage Insurance had some big findings about first-time home buyers:
- With over 2 million new or resale homes bought in 2017. That is a 7% increase over 2016. It also makes 2017 the strongest year for the first-time buyer market since 2006.
- Notably, they have been buying more than half a million single family homes last quarter. That makes it the best fourth quarter for first-timers since 2006.
- For one thing, they bought 39% of all single family homes sold.
- They consider 55% of all purchase mortgages have been able to support the last quarter.
- In particular, they have financed nearly 400,000 homes using low down payment mortgages last quarter. That makes it the strongest fourth quarter for low down payment loans since 2000.
- First-time home-buyers guide.
Why This Data Matters
In fact, it has been noted that there has been a 40% growth among first-time buyer purchases since 2014. It accounts for over 80% of the growth in home sales since 2014. That has had a big impact on the housing market.
Today, they believe the housing market is more mature than it was three years ago. Between 2007 and 2015, the annual number of first-time buyers has been below 1.8 million. But in 2017, they purchased over 2 million homes.
That is proof of a major housing market recovery. Growth will likely slow from this point forward. But the size of the first-time buyer market and its impact on housing will remain a significant force.
Why More First-timers Are Buying
Furthermore, a few key factors are driving increased home sales among first-time buyers. One is improved conditions for borrowers and workers. Interest rates were at or below 4% between 2014 and 2017. Also, wages are higher and the unemployment rate is down to around 4% today.
Fewer are unemployed or underemployed among those younger than 35. So increasing income and stable employment are driving this. Actually, millennials are currently reaching their peak buying years. That creates pent up demand.
They are starting to enter their thirties. Many are getting married and having kids. These activities lead to a desire to buy a house. What is more, rents have been rising steadily for five or more years. That makes the cost of owning lower than renting often.
Act Soon If You Can
The high demand among first-timers is not going away anytime soon. The trend for millennials getting into the housing market will continue. This is due to growth in household formations.
If Genworth’s findings do not motivate more people to become first-time buyers, another factor will. In fact, prices are going up. This creates a sense of urgency for buyers to purchase sooner. If one is able to buy now and wants to buy, they should since delaying could cost them later on.
Action Steps You Can Take
To help you afford and claim a home, experts suggest a few tips. To start with, find and work with a good lender and real estate agent you can trust. Secondly, do not be afraid to use a low down payment mortgage. They can be a great tool for first-time buyers. Many believe they need 20% down to buy a home. But our data show that about 80% of buyers put down less than 20%. Most are in the 3% to 5% down range.
Also, try to be more open minded about your housing choices. There is nothing wrong with a fixer upper or a smaller starter home. First-time buyers should try to purchase a home for much less than what they qualify to finance. In fact, it is stated that millennials need to be more creative when choosing a home. Additionally, they should be prepared to put in some sweat equity if needed.
There is nothing wrong with picking a resale home. They are statistically less expensive. New construction prices will most likely increase in the short term. That puts a newly built home out of reach for many millennials. Lastly, once you find the right home, prepare to act fast. Be ready to make a very good offer upfront. In addition, you should expect to compete with multiple other offers.