The median age for a first-time homebuyer in the U.S. has ranged between 30 and 32 over the last 30 years, according to statistics from the National Realty Association. However, in the last few years, many people have found themselves waiting even longer to pay down student loan debt and save up for a first home, and the average age has increased to 34-35. With stricter lending and credit qualifications, many young borrowers that would have qualified for a loan a number of years ago no longer qualify.
Many people considered “Millennials” are putting off buying a home because they are getting married later in life than their parents did, they are having children later, and overall, they are renting longer before buying. The unemployment rate for this demographic is also slightly higher than it has been in the past, leaving some Millennials living in their parents’ homes longer.
First-time homebuyer presence in the market is important, since first-time home buyers make up about 40% of the entire market. Their presence helps the remaining 60% sell their homes and trade up. As the age of first-time homebuyers increases and the number of first-time homebuyers decreases, everyone else suffers.
As potential first-time homebuyers delay their purchases, they diminish the demand for starter homes, which incidentally makes it more difficult for growing families to sell their homes and move into larger homes.
There are, however, loan options for first-time homebuyers that can make it possible for more Millennials to own homes.
Federal Housing Administration (FHA) loans help many first-time homebuyers. Also, first-time homebuyers are often in need of help with their down payment since they are not selling a home and using its profits to buy another home. Down payment assistance programs sponsored by state agencies can also help. These state programs can provide first-time buyers low-cost loans or grants to help them with the 3.5 percent down payment required by the FHA.
If you are considering purchasing and new home and need assistance, contact us today.