First-Time Home Buying Still at Low Levels
June 17, 2013
First-time home buyers make up about 29 percent of the housing market, which is “weaker than the historic norm” of 40 percent, according to Walt Molony, spokesman for the National Association of REALTORS®.
As the housing market’s recovery strengthens, why are the numbers of first-time home buyers numbers still so low? The leading culprits have been identified as tight credit conditions, limited housing inventories, and steep competition from investors for the same properties.
“Many lower-income home buyers have been effectively cut out of the market” since the housing bubble burst in 2007, says economist Kevin Gillen of the University of Pennsylvania’s Fels Institute. "Whether they're unemployed, underemployed, can't assemble a sufficient down payment, or can't get credit, these are problems that disproportionately affect young, first-time home buyers. We've been left with a housing market composed of relatively wealthier households trading relatively high-priced homes with each other."
Some economists say they’re starting to see that change, however, with the number of first-time home buyers increasing in some regions, particularly where inventory levels are increasing.
"I think there was a huge buildup of potential buyers 'on the fence,' waiting to see what the economy and housing market were going to do," says John Duffy of Duffy Real Estate in Narbeth, Penn.
Source: “Are there enough first-time buyers to sustain housing recovery?” The Philadelphia Inquirer (June 16, 2013)
Updated: June 22, 2018