First Time Homebuyer Trends

Understanding trends in the first time home buyer marker is important to forecasters of new builds and for the promotion of home ownership. Net increases in the number of people who own homes are largely responsible for determining how much new, occupied housing the economy needs to keep growing.

For policymakers in government, the main objective is to bring ownership to people who haven’t experienced it before, so studying first time buyer trends can help establish appropriate mortgage interest deductions and other tax incentives, as well as keeping interest rates low.

The characteristics of a typical first time buyer is of huge interest to sellers, property developers and construction firms who are targeting this section of the market and want to understand their potential customers.

And understanding the trends can certainly assist the first time buyer themselves. The data can help you isolate sweet spots in the market and take advantage. When shopping for a mortgage, it’s good to know what you’re up against (try this useful mortgage calculator from Santander to get a better understanding of your place in the market).

In a recent study, the American Housing Survey learned that first time buyers were, on average, 33 years old, had a household income of $64k, bought a house priced at around $150k, and accounted for 43% of all homes sold. Less than 5% of first-timers were over 55, while two thirds were under 35.

About a third of first time households were comprised of two people, with a fifth being bought by a single person, and another fifth by three people. The remainder had more than three people in the house. When looking at move-up buyers and non-mover owners, first timers by comparison have lower incomes.

Around 31% of first time buyers are married with children. One person households are twice as likely to be male as female, but single parent households are twice as likely to be female headed. These are the kinds of statistical details that developers and policy-makers keep a keen eye on.

The ripples caused by fluctuations in the first time market are sent in all directions. It’s interesting to note that during the nineties, almost 80% of first time buyers financed their home with a fixed rate mortgage, while only 9% used an adjustable rate mortgage. Perhaps surprisingly, move-up buyers were similarly inclined, with just 10% using an ARM, and 80% opting for a FRM.

Among first time buyers with a mortgage, the average rate of interest was 5.85%. However, over 14% of first timers had an interest rate of more than 7%. Almost 56% of first time buyers used their own savings for the down payment, with no other single source of financing even coming close. Move-up buyers largely used money from the sale of their previous house for their new down payment, while 25% used personal savings.

Keeping an eye on first time buyer trends can help you if you are in that demographic yourself. It’s best to be prepared when using and know the market, so you can avoid being surprised or ripped off.


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