High rents, high debt and increased competition are three things buyers overcame to purchase their first homes this year, according to a National Association of Realtors executive.
The NAR released its 2015 Profile of Home Buyers and Sellers on Nov. 5, which reported the percentage of mortgage originations that went to first-time buyers fell for the third straight year in a row to its second lowest level in history.
"We know rents have been steadily rising in many markets and this has a direct impact on the abilities of many renters to save for a new home purchase," NAR Director of Survey Research and Communications Jessica Lautz said. "Seventy-seven percent of first buyers were renting before they bought. That tells us they weren't just moving out from their parents' basements."
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In addition, she said debt levels, including particularly high student loan debt levels, made it difficult to save for a home. Citing the survey, Lautz observed 25% of new buyer respondents reported overcoming debt to save for a new home and 58% of those reported student loan debt had been a challenge.
"It's important to remember that with an average student loan debt load of $25,000, there will be a number of people with a higher load than that, and this can make it very hard to save a down payment," she said.
Finally, she pointed to a shrinking number of available homes in first-time buyers' price ranges for keeping them out of the market.
"Unlike previous housing recoveries, investors buying homes to rent or flip for higher prices have been a large factor in many of these markets," Lautz added. "Not only do the investors have deeper pockets than first-time buyers, they compete for many of the same homes first-time buyers might buy – and they have cash."
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