In the housing market, new buyers are gradually increasing their stake. First-time homebuyers comprised 32% of existing home sales in March, which is up from 30% just a year ago and 29% in 2014.
Because there is a potential threat of interest rate increases, it may be prompting more first-timers to get into the market this year. According to the March Realtors Confidence Index, sustained job and income growth is playing a role. There could also be a modest increase due to the aging of the millennial generation. The Confidence Index report notes that first-time homebuyers are most likely to be between the ages of 25 and 34.
In most markets, Realtors are saying that interest from first-time homebuyers is up this year, but competition is tough for listings in their price range.
The great news is that those who do find a home in their price range aren’t having to use their entire life savings when going to the closing table. 63% of first-time homebuyers put down anywhere from 0 to 6% to secure a mortgage. In opening the credit box, the Federal Housing Administration has reduced its annual mortgage insurance premiums and the government-sponsored enterprises—Fannie Mae and Freddie Mac—now accept mortgages with 3 percent down.
That being said, the Confidence Index report notes that the impact of these measures in attracting first-time homebuyers is low because there is a general lack of knowledge about the opportunities available. Only 13% of people aged 34 or younger believe they can buy a home with a down payment of 5% or less, according to the National Association of Realtors 2016 3rd Quarter Housing Opportunities and Market Experience (HOME) Survey.
Whether you’re a first-time homebuyer or a seasoned pro, when you’re buying or selling a home, you’ll want an experienced Realtor by your side. Contact Yorkville IL’s smart choice for real estate, Yorkville real estate agent Lauralee McElroy.