Home >> Uncategorized >> Number of Younger Buyers Purchasing for First Time Jumps
Print This Post Print This Post

Number of Younger Buyers Purchasing for First Time Jumps

According to Zillow’s 2023 Consumer Housing Trends Report, first-time buyers now make up 50% of all home buyers, up from 45% a year ago and from 37% from 2021. The share of first-time buyers likely hasn't been this high since around 2010, when there was a first-time home buyer tax credit. 

First-time buyers are making a resurgence in the market relative to repeat buyers due to the “lock-in” effect because they have mortgages under 5% and are unlikely to want to give up that rate. All of this is happening as inventory shrinks, but a significant rise in the share for first-time buyers does help explain what is driving demand as mortgage rates hover near 7%. 

"High mortgage rates and a shortage of inventory is keeping would-be repeat buyers in their current homes," said Zillow senior population scientist Manny Garcia. "A greater relative share of first-time buyers is filling the gap, and they're competing against each other for the limited number of affordable starter homes on the market." 

It’s no secret that affordability is the greatest hurdle for first-time home buyers as the prices of homes continue their generally upward march. According to Zillow, it now takes nearly 12 years for a typical first-time homebuyer to save up for a standard 20% down payment, this number is up from nine years before the pandemic. 

In addition, most first-time homebuyers are utilizing at least two sources of income to finance their downpayment savings, so that means double jobs or two partners sharing the load. Buyers can also utilize down payment assistance to help themselves along. 

Nearly half of first-time home buyers are millennials (49%), a massive generation of adults ages 29–43 who are fueling fundamental housing demand as they hit their prime home-buying years. Gen Z adults between 18 and 28 years old are hot on their heels, making up more than one-quarter of all first-time buyers (27%). 

“These younger buyers are debunking the "lazy millennial" myth by working harder during the home-buying process,” Zillow said. “Zillow's report finds that first-time buyers are more likely to contact at least three real estate agents and three mortgage lenders, compared to repeat buyers. They're also more likely to make at least two offers on homes, and are more likely to report being denied a mortgage at least once before they're approved for a loan. First-time buyers are seeing their persistence pay off for a piece of the American Dream, and many still believe the opportunity to build equity outweighs today's higher costs of entry.” 

About Author: Kyle G. Horst

Kyle Horst
Kyle G. Horst is a reporter for DS News and MReport. A graduate of the University of Texas at Tyler, he has worked for a number of daily, weekly, and monthly publications in South Dakota and Texas. With more than 10 years of experience in community journalism, he has won a number of state, national, and international awards for his writing and photography. He most recently worked as editor of Community Impact Newspaper covering a number of Dallas-Ft. Worth communities on a hyperlocal level. Contact Kyle G. at [email protected].
x

Check Also

Some Homeowners Feel Negatively About Building More Housing Near Them

A recent Redfin survey revealed nearly 80% of respondents support promoting building more housing, while 20% of them remain opposed to building an apartment complex in their neighborhood.