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Where First-Time Buyers are Finding Homes

First-time buyers stepped up in Q3, as the U.S. housing market slowed down enough to loosen inventory nationwide, according to the newest First-Time Homebuyer Market Report from Genworth Mortgage Insurance.

As houses got pricier and interest rates went up, affordability suffered, pulling the market's foot off the gas pedal a bit in the third quarter. Perhaps counterintuitively, the report found, this opened the market up to more buyers, including first-timers.

Genworth's Chief Economist, Tian Liu, called this “the biggest surprise” in the report—that during a moderate slowdown, the number of first-time homebuyers increased 17 percent from a year ago.

But it happened, he said, because, with prices so high, first-time buyers are increasingly looking for lower-cost housing, and finding it in an increasing number of states across the South and Southwest.

According to the report, the number of first-time homebuyers grew mainly in Florida, Georgia, Arizona, Mississippi, Virginia, and North Carolina. Those states saw first-time buyer numbers tick up between 5 and 14 percent.

Low downpayment conventional loans with private mortgage insurance were the largest source of credit for first-time homebuyers this quarter, the report found.

Traditionally expensive states like California, New Jersey, New York, Massachusetts, and Illinois were among 19 states to see first-time buyer numbers drop. Dips also occurred in states that have been more friendly to new buyers, mainly Texas, Michigan, and Indiana.

The biggest loss in the number of first-time buyers was in Alaska, down 16 percent. The biggest jump in first-timers, though occurred in South Dakota, where new buyers increased 24 percent in Q3.

Genworth reported that since the second half of 2017, the year-over-year growth in home sales to first-time homebuyers has slowed to less than 3 percent—which happens to be the rate of wage increase growth nationally.

"This is not enough to offset the deterioration in housing costs," Liu said.

Still, the first-time buyer is a strong cog in the system. Younger buyers, in particular—many who've waited for the better part of a decade to start looking—are optimistic that they can find places to live in a strong housing market. They're just shifting their attention from the coasts and towards parts of the country with more affordable options to offer.

About Author: Scott_Morgan

Scott Morgan is a multi-award-winning journalist and editor based out of Texas. During his 11 years as a newspaper journalist, he wrote more than 4,000 published pieces. He's been recognized for his work since 2001, and his creative writing continues to win acclaim from readers and fellow writers alike. He is also a creative writing teacher and the author of several books, from short fiction to written works about writing.
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