First-time homebuying hits 40-year low, but it still might be a good time to buy if you can
PITTSBURGH (KDKA) — The share of first-time homebuyers has dropped to a record low this year.
As KDKA-TV money editor Jon Delano reports, while all races are impacted, first-time Black homebuyers are especially hard hit. A report from the National Association of Realtors found fewer first-time home buyers than ever.
"First-time homebuyers are actually at the lowest level since NAR has actually recorded them dating back to 1981," says Jessica Lautz, NAR's vice president of demographics and behavioral insights.
Lautz says the share of first-time homebuyers has declined dramatically. After hitting 50 percent in 2010, it dropped to 34 percent last year and is now at a record low of 26 percent.
"The rise in inflation, the rise in rents, student loan debt, car loans, all of that is making it very difficult for first-time homebuyers or potential buyers to save for a down payment," says Lautz.
All that plus a combination of higher prices for homes and a doubling of the mortgage interest rates makes home buying tough for everyone, especially younger, first-time buyers who are now delaying their first home purchases.
"We used to see that the first-time homebuyer was in the very tight age bracket of 28 to 33. So young adults. Right now, we see a first-time homebuyer closer to 40 – 36 years old – than they are to 30," says Lautz.
"That's really the highest age that we've seen, and it really comes down to the hurdles that we've seen in saving for that down payment and the delays that they are having entering," Lautz added.
The NAR study also found that among low-income buyers, African American new homebuyers took a significant hit, dropping from 6 percent of new homebuyers to just 3 percent today.
"Unfortunately, when we look at black homebuyers, they are more likely to have student loan debt, they're more likely to have lower household income, less likely to have generational transfers of wealth that often put first-time homebuyers into homes," says Lautz.
"We are desperately reaching out to get that community back into homes," adds Jim Martin, a local mortgage broker.
Martin says Pittsburgh is experiencing the same national trends, requiring people to have more income to buy a median-priced home here in the $225,000 range.
"What you could buy a house for on the median side was about $26,000 to $27,000 in income, and now that median income has to be around $42,000 to $43,000 to afford the same house," says Martin.
Martin says Pittsburgh is not immune from these national trends, but unlike many markets, housing is still relatively inexpensive in this region. Martin says, if you can swing it financially, it's still smart to buy your first home sooner, rather than later.
"The price of waiting is probably not going to benefit. A lot of people that I talk to are saying, 'I'm just going to wait and see if the market bounces back, the prices start coming down, maybe we can buy a house in the spring,'" says Martin.
"There were three times in the last 40 years when housing prices in Pittsburgh declined," Martin added.
Martin says while the median home price is $225,000, there are some homes for sale under $100,000.
"If you can afford the pricing, if you can get into a real estate, date the rate, buy the house. That's what we tell you. You can lock in that low price and then if the rates improve, we are happy to get you into a lower rate," Martin said.
"But right now, don't hang your hat on waiting for the prices to come down. It just historically doesn't happen."
If you need help to buy a first home, local brokers say you should explore a variety of government and bank programs designed to help first-time homebuyers. Here's a link to some government programs.