According to a recent study, the number of first-time buyers has hit an almost 30-year low in the US. Traditionally hovering at around 40% of the market, this year’s number dropped 5% from last year to just 33%, the lowest since 1987.
According to NAR’s chief economist, “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 workforce,” 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.”
It will be interesting to see how this plays out. What will happen to home prices in the middle and upper ranges when there are fewer and fewer buyers at the bottom? The study didn’t speculate on these questions, however.
What do you think is going to happen if the first-time buyer base keeps shrinking?