First Time Big Rapids Home Buyer Rates at Near 30-Year Low
At the end of 2014, the National Association of Realtors® was able to come up with some general observations on the makeup of the current market — facts that anyone expecting to deal with Big Rapids home buyers in the coming year should find useful. With consumer attitudes showing improvement across the board, you might have expected that all segments of the home buying public would have shown increased activity. Not so.
According to the NAR’s annual survey — the big one that they’ve been conducting since 1981 — the percentage of first time home buyers sank to a nearly 30-year low. It dropped 5% in just one year. Throughout the 40+ years of the survey, first time home buyers have usually made up about four of every ten home sales… but in 2014, that rate fell to 33%. 1987 was the only other year with a comparably weak rate.
We don’t tally separate statistics on Big Rapids'first time home buyers, but there’s no reason to suspect our buyer profiles wouldn’t reflect the same trend. But there’s some good news, too. Help may be the way.
The reasons first-timers have been having a hard time was addressed by Dr. Lawrence Yun, NAR’s chief economist. He points to obstacles Big Rapids first-time homebuyers are likely to face — many of them connected with the rising difficulty young people have in saving for a down payment. Rising rents plus student debt and auto loan payments combine with stagnant wage levels to cramp savings growth. Added to that, the cost of mortgage insurance for Federal Housing Authority-insured loans have been rising. In 2010, 56% of first time home buyers used affordable FHA loans to purchase their home; by 2014, that number had dwindled to 35%.
Dr. Yun’s analysis is borne out by a separate RealtyTrac analysis of housing affordability and down payments. This, too, was a wide-ranging survey, examining affordability in 500 counties across all states. It found that for buyers with no additional debt, housing is affordable in 90% of markets — regardless of whether a 3% or a 20% down payment was contemplated. But for buyers with additional debt (like Dr. Yun’s student loans and car payments), housing is affordable in only 48% of real estate markets. Many who find themselves in that category are first-time home buyers. No wonder their activity is down.
That sounds like daunting news for many aspiring Big Rapids first time home buyers, but some good news is waiting in the wings. RealtyTrac footnoted a big one. According to data collected by Down Payment Resource, there more 2,300 separate programs are out there to assist buyers with down payments and closing costs. Finding which ones a Big Rapids first time home buyer might be eligible for is easy: DPR offers online help. Add in recent good news on the economy (job growth in particular) and government efforts to loosen mortgage loan requirements by lowering down payments, and it looks likely that 2015 will find more first timers crossing the threshold to their first home. I hope it is the wave of the future — and, as we see more and more first-time buyers, I’m standing by to help make it happen!