09 Nov The Changing Profile of the First Time Homebuyer
Today, the first time homebuyer is typically older. They spend more time renting partially because they are getting married later. Zillow reports that their tastes have changed as well – instead of a “starter home,” today’s first time homebuyers are purchasing a middle-of-the-road home. First homes used to average about $113,000 and now the cost is approximately $140,000.
Many are purchasing condos in lieu of single family homes. The share of condos purchased by first-time buyers has risen to 42 percent, from 28 percent in 2001. Over the same period, the share of single-family homes purchased by first-time buyers has fallen from 71 percent to 58 percent.
Unfortunately, higher home values and flat wages grossly affect the price-income ratio for first time homebuyers, making it more difficult to secure a loan. The share of loans requiring mortgage insurance protection, which protects banks in the event a borrower can no longer pay their mortgage has risen.
It’s imperative to understand the profile of these buyers. Old-fashioned advertising messages need to be updated and speak directly to today’s first-time buyers, not who they used to be. The future of the real estate market depends on staying on top of their continuously changing profiles.
To read more on Zillow and see a chart of how buyers have changed over the years, click here.