According to the Wall Street Journal, first-time home buyers represent a traditionally reliable slice of the housing market, but they now comprise the smallest share of U.S. buyers in nearly three decades. Their absence in the market is raising questions about the impact of the crash on potential homeowners.
Making sense of the story
- Just 33 percent of primary residences sold this year were purchased by first-time buyers, down from 38 percent last year to the lowest level since 1987.
- First-time-buyer share of home sales have typically hovered around 40 percent since 1981.
First-time buyers have contended with a confluence of factors making a purchase more difficult.
- Wages and benefits have been relatively stagnant, growing only 0.5% per quarter on average since the recession.
- In addition, higher student debt, rising rents, and a weaker job market have made it harder for would-be buyers to save for a down payment and qualify for a mortgage.
- In addition to issues of affordability, some renters might be putting off home purchases because of the damage they saw housing do to the last generation of buyers.
- The average down payment, typically a hurdle for new buyers, was 18 percent in September, only slightly lower than the 19 percent put down in September 2013, according to Ellie Mae, a mortgage software provider.
- Many recent college and professional graduates may have less confidence in finding and keeping jobs, leading them to choose to rent rather than buy immediately.
Read the full story: http://blogs.wsj.com/economics/2014/11/03/share-of-first-time-home-buyers-hits-27-year-low/