Friday, February 06, 2015

NAR Survey Shows Decline in First-Time Homebuyers

Despite an improving job market and low interest rates, the share of first-time buyers fell to its lowest point in nearly three decades and is preventing a healthier housing market from reaching its full potential, according to an annual survey released this week by the National Association of Realtors.

The long-term average in this survey, dating back to 1981, shows that four out of ten purchases are from first-time homebuyers. In this year’s survey, the share of first-time buyers dropped 5 percentage points from a year ago to 33 percent, representing the lowest share since 1987 (30 percent).

Some analysts say young, first-time buyers will not make up a significant part of the buyers' market anytime soon.

"This group has had troubles economically getting jobs, being in debt from school and not having employment history or savings for down payments to qualify for a home loan," said Dr. Jim Gaines, research economist with the Real Estate Center at Texas A&M University.

"If they have a job, it may not be all that secure or at least they think they need to maintain flexibility in case they have to move or relocate — so renting is a more viable option," Gaines said. "And with all the new, upscale rental units available, renting is seen as a more attractive option than being stuck with a long-term mortgage."