By Jorge Vazquez
Aug 25, 2023, 07:00 AM EDT
Zillow’s 2023 Consumer Housing Trends Report shows that half of all homebuyers are buying their first home, the highest proportion the realtor has ever recorded.
The study found that first-time buyers now make up 50% of all homebuyers, up from 45% last year and a significant increase from 37% in 2021.
The ratio of first-time buyers probably hasn’t been this high since around 2010, when there was a first-time buyer tax credit.
“High mortgage rates and inventory shortages are keeping potential repeat buyers in their current homes,” said Manny Garcia, Zillow’s senior population scientist. “A larger relative proportion of first-time homebuyers are filling the void and are competing with each other for the limited number of affordable starter homes on the market.”
According to the analysis, affordability is the biggest hurdle for first-time homebuyers. Now it takes a typical first-time homebuyer nearly 12 years to save for a down payment, compared with nine years before the pandemic.
Meanwhile, the typical monthly home payment has more than doubled in that time. However, the growing proportion of first-time homebuyers suggests that many are getting creative in making homeownership a reality.
The Zillow report notes that most first-time homebuyers use at least two sources to finance their down payment (60%), most commonly their savings and gifts from family or friends. Down payment assistance can help, and available programs are included in every sale listing on Zillow.
According to the report, nearly half of first-time homebuyers are millennials (49%), a massive generation of adults ages 29-43 who are driving fundamental housing demand as they enter their prime years to buy a house. Gen Z adults ages 18-28 are hot on their heels, accounting for more than a quarter of all first-time buyers (27%).
“These younger buyers are challenging the myth of the ‘lazy millennial’ by working harder during the home buying process,” the report says.
It also indicates that first-time buyers are more likely to contact at least three real estate agents and three mortgage lenders than repeat buyers. They are even more likely to make at least two home offers and more likely to report being turned down for a mortgage at least once before being approved for a loan.
“First-time homebuyers are seeing their perseverance pay off for a piece of the American dream, and many still believe the opportunity to raise capital outweighs today’s higher costs of entry,” says Zillow.
Keep reading:
· Real Estate Market Myths Affecting Buyers and Sellers in the US Today.
· How far will it go? The price of housing in the US does not stop increasing
· Places homebuyers are moving to in the US.