First-time buyers now account for only one-third of all home purchases, the lowest share since 1987.
That's according to an annual survey conducted by the National Association of Realtors, which questioned a random sample of people who purchased homes between July 2013 and June 2014.
It's not just not as easy as it used to be for young adults to purchase a home, said NAR Chief Economist Lawrence Yun.
"Rising rents and repaying student loan debt makes saving for a down payment more difficult, especially for young adults who've experienced limited job prospects and flat wage growth since entering the work force," he said. "Adding more bumps in the road is that those finally in a position to buy have had to overcome low inventory levels in their price range, competition from investors, tight credit conditions and high mortgage insurance premiums."
Wages should go up as the job market improves, but first-time buyers report that getting a mortgage is a lot harder than they expected.
"Less stringent credit standards and mortgage insurance premiums commensurate with current buyer risk profiles are needed to boost first-time buyer participation, especially with interest rates likely rising in upcoming years," Yun said.
The median age of first-time buyers was 31, and their median income was $68,300. Their typical purchase: a 1,570-square foot home costing $169,000.
The typical repeat buyer, by contrast, was 53, with an income of $95,000. Repeat buyers bought bigger and more expensive homes.
Home sellers, meanwhile, are getting older: 54 on average now vs. 46 back in 2009. The typical seller has been in his or her house for 10 years — a new high.
http://www.bizjournals.com/washington/news/news-wire/2014/11/03/where-have-all-the-first-time-buyers-gone.html
Some other issues that might be affecting sales:
- Old housing stock needing renovation
- Low quality new construction
- High real estate agent fees
- High insurance rates
- High property taxes
- Appreciation at less than the rate of inflation
- Inflexibility for employment
I actually think that the idea of stringent mortgage loan standards might be the best thing to happen to the real estate industry, ever. (Which is to say that if you can't afford a home, then you shouldn't be allowed to buy that home.)
As for why first-time home buyers aren't entering the market (and perhaps even past-time home buyers burned by the bubble aren't re-entering the market,) I think that's pretty simple:
- Higher outstanding debt to start (student loans)
Higher personal expenditures than in the past (larger percentages spent on cars, food, fuel, etc.)
Less job and geographic security (we're waaaaaaaay past the pension/job for life/watch when retire phase)
Poor housing stock matches (a product that doesn't match their initial needs, for example a cracktown house or a suburban family home)
The housing bubble burst (while 'Muricans have short memories, scar them enough and they have more recall. It's like how the gas crisis of the 70s didn't work its way out of the auto buying public until the early 90s, despite being drowned by oil in the 80s.)
I'm a first time home buyer. The inventory's low right now and the good houses are getting snatched up fast. At least with the search criteria in the area we're looking.
It took a life event to get me to even consider buying a home. We need more rooms and renting a house was going to be more than owning, so we finally decided to buy.
Also, the first time home buyer incentives aren't as sweet as they were years ago either. The only one available in Duval that I know of is a no interest loan for down payment assistance that you pay back upon selling the house, but we didn't go that route.
Priorities have changed. For the longest time, the mantra of the "American Dream" was to own your own home. As with just about any centrally planned idea, it blew up in the face of everyone doing whatever it took to make sure people could be home owners.
Today, especially in my age group (25-35), mobility is the key word. People just aren't as keen as staying put in one place for an extended period of time. The ease of maintenance is another reason renting makes more sense. And, as pointed out in previous posts, it's just simply cheaper. You don't have to take out a loan to rent.
And for an added commentary, there should be no reason whatsoever for Federal programs to "encourage" home ownership. Gerrymandering a specific market in order to entice buying is exactly how you get market bubbles to begin with - because the increase in demand isn't real. I feel that for the long term health of the housing market, organizations like the FHA, HUD, GNMA, Fannie, Freddie, etc need to be completely erased and removed from the picture. Allow the market to return to normalcy - where supply and demand dictate pricing and ultimately the rates of new home buyers.
Quote from: WarDamJagFan on November 04, 2014, 10:04:51 AM
i feel that for the long term health of the housing market, organizations like the FHA, HUD, GNMA, Fannie, Freddie, etc need to be completely erased and removed from the picture. Allow the market to return to normalcy - where supply and demand dictate pricing and ultimately the rates of new home buyers.
Except "normalcy" IS government-sponsored organizations acting in the market. The mortgages prior to the New Deal resembled the more exotic ones of today. Balloon loans with terms of just three to five years were common. Homeowners, like those of the 2000s, simply expected to be able to refinance. The money for these mortgages, in an eerie echo of today, came from debt that banks sold to investors, and the bond-repayment periods were equally short.
As investors became skittish after the stock-market crash of 1929, investors stopped buying mortgage bonds. Banks no longer had the capital to refinance homeowners, and no one could refinance their mortgages. The only thing that prevented the collapse of the housing market was the Home Owners' Loan Corporation, a government-sponsored enterprise, which started swapping bonds of its own for bank mortgages, injecting liquidity into the system.
The FHA plan was that the government wouldn't pay for any of it. Lenders would contribute to an insurance pool organized by, but not funded by, the federal government. If there was a default on a mortgage, the lender would be paid out of the pool. Paid in low-yielding bonds, the lender wouldn't lose the principal of the mortgage, but neither would the lender have an incentive to lend to the unworthy. With such a long repayment period, the monthly installments could incorporate both interest and principal.
Mortgage amortization, as such a plan was called, eradicated the need for refinancing, which made the balloon mortgages so precarious. A long period made the mortgages independent of short-term fluctuations in the economy. Borrowers wouldn't have to weather both unemployment and refinancing at the same time.
The FHA preserved private choice while accomplishing a public good. No lenders had to comply with the FHA, but if they did, their business would be much easier to conduct. Risk-free loans with guaranteed buyers provided an incredible -― and noncoercive -― incentive to lend private capital.
As a 35 year old who purchased his first home at age 31, and with several friends in my age group (late 20s to late 30s), there's a huge mix of reasons that they haven't bought homes. Their family has a lot to do with it - those with kids are (naturally) more eager to jump into the homeowner market. Those of us with no kids, jobs, disposable income, etc. don't like the idea of paying homeowners insurance; ever increasing property taxes; and the costs associated with maintaining a home (my 1950s home needs new plumbing, a new roof, and some electrical upgrades - and the money is not there to do any of it).
Financing is hard to get but lots of younger people are so saddled with debt already that they aren't even considering the financing. It's about just getting by and enjoying the time we have versus spending all our time and money on a house.
Not to mention the career mobility thing. I've had a couple offers to teach near Chicago but the house ties me down. I can sell it, but it'll be at a big loss unless the roof and plumbing fairy descends upon me and grants my wishes.
I'm 22 and I purchased my home a little over a year ago. It was hard but I managed to do it. I was tired of paying rent. My mortgage is way lower than my old apartment.
Additionally, those of us who came of age around the time the recession hit saw friends lose big on property investments, and even lose their homes. It definitely made my wife and I reluctant to take on such a big investment ourselves. We didn't do it until we were absolutely sure we'd found what we wanted (and were really sick of landlords).
I'm curious as to where the trends lead, meaning that if young people are putting off childbirth and having less children, and are looking for a denser, more connected way of life (a generalization, I grant you,) will that not mean that the majority of suburbia basically consists of housing stock that people don't want, or, at the very least, housing stock that requires reinvention/rehab of the housing stock...if not the whole suburb?
I'm not sure...it seems as if we're at the transition point, where people want both the giant McMansion and the cozy and charming downtown (real or fake.) But if history is any indication, we'll make that move really quick as a culture (think trains to cars and planes,) and if recent history is any indication, we'll basically let the free market decide and hope for the best.
The local NE Florida data suggests that new construction housing is back to where it was before the bubble of 2006. We are in a normal pattern for new construction year over year. That being said, there are pockets where the supply of homes is double that of other areas.
The Riverside area for instance, has almost 9 months of housing on the market, versus say Avondale where there is only 4 months of housing on the market. Murray Hill is about 6 months of houses on the market.
QuoteThe housing prices of the Jacksonville Metro Area are close to the country average with a median home value of $122,300 and a current average list price of $206,049. St. Johns County, Nassau County, and Clay County have the least expensive homes in the metro area. The number of homes sold in the Jacksonville Metro Area market dropped to 1,381 over the past 30 days, a decrease of 10.3% from last week's report, but still above the monthly average.
The typical dwelling in the Jacksonville Metro Area is a three-bedroom detached home worth about $170,998. To purchase a similar home, a buyer with good credit and a $34,200 cash down payment could obtain a mortgage with a 3.86% interest rate and a $873 monthly payment. The property tax rate is $10.30 per $1,000 of taxable assessed value.
The Jacksonville Metro Area real estate market is fairly healthy. The median list price is $218,995 and the average home has been on the market for 113.1 days. In the past month, there have been 1,445 real estate transactions in Jacksonville Metro Area, with a median sale price of $167,400. The recent sales activity in Jacksonville Metro Area represents a -1.5% change over the prior month.
There are currently 7,564 Jacksonville Metro Area homes for sale, which equals about 5.2 months of inventory. There are 6,401 detached homes for sale, 461 townhouses for sale, and 702 condos for sale. In the past 30 days, there have been 2,659 new listings in Jacksonville Metro Area, 2,465 price changes, 1,947 new contracts, and 1,445 home sales.
Bottom line - Don't get caught up in what the national data says, Florida was one of the last states to emerge from the Foreclosure slump, and its still getting its legs underneath itself. Housing is the main US economic engine too. Jacksonville's overall Real Estate market is Healthy and should not be a major cause for concern.
Part of the issue in Riverside are the prices. I think anybody's bound to do a double take at all these 1k-1400 ft. sq. 2/1's and 3/1's going for $250k around here. It's a bit of a hard pill to swallow, when that buys you a house three times the size elsewhere. They do seem to eventually sell though, which I think is a testament to the desirability of the neighborhood.
I looked at riverside and I gave up. Too expensive for me. That's why I went to Murray hill lol. You can get a cute bungalow for half the price in a neighborhood that is going through a good transition. I noticed a lot of the homes on the market in M/H are fully renovated which is another plus for future home buyers.
Student loans And people waiting longer to settle down are probably your two biggest factors.