Real Estate News

First-time buyers hold significant sway in housing market

Published: 19 Sep 2017

When the portion of the mortgage market taken up by homebuyers, rather than refinancers, was in the doldrums, industry experts remained assured of one fact. If and when the millennial generation in particular was able to shift into buying mode, sales would take off like a shot. Now, that's finally starting to happen in earnest, and indeed, it's now expected to continue for some time.

While the share of previously owned homes and condominiums, which young buyers have long favored thanks to the lower price tags, being purchased by first-timers remains below historical norms, it has grown somewhat sharply in the past year-plus, according to The Los Angeles Times. Experts say that activity indicates the economy has improved enough to put at least the first wave of serious millennial homebuyers in a position to buy for the first time. As expected, they've shown a significant appetite for home purchases, and therefore the share of properties purchased by first-timers is likely to grow in the months and potentially years ahead.

First-time buyers are a major force in today's housing market.First-time buyers are a major force in today's housing market.

Areas of interest
With the cost considerations normally faced by first-time buyers in mind, there are a few noteworthy issues that will likely affect homebuying activity among millennials for the foreseeable future, the Times reported. The first is the intense competition young shoppers are likely to face for just about any relatively low-priced property they seek, even as more first-timers seek properties farther out from heavily populated urban centers.

Another emerging trend among the youngest generation of adults is that many may purchase fixer-uppers as a means of keeping that initial price tag down, and then put in the work to get the houses up to their preferred standards, according to Houzz. However, this expectation comes with the caveat that these inexperienced owners may not know everything that's involved with such a renovation. For instance, only about 1 in 5 homeowners said they were aware of local regulations before starting a renovation, and once they learned more about those rules, about half of them had to alter their plans.

Meanwhile, more than 1 in 3 owners, first-time or not, said they would work with a professional on the permitting process, but experienced owners were far more likely to do so than first-timers.

More builders focus on affordability
Meanwhile, housing developers seem to see the opportunity available to them here, as well, according to the Nashville Tennessean. A growing number are starting to build more modest properties specifically designed to appeal to first-timers and finding there's incredible demand. One Nashville developer of a community of 49 single-family homes priced in the mid-$200,000 range expected to sell them over the course of 18 months. But just a few months after putting the properties up for sale, only eight were still on the market.

These issues highlight the unique challenges and opportunities facing first-time buyers in today's market, and those who begin the shopping process soon may want to do their homework to determine exactly what they will need to meet their goals.