In many areas of the country, the number of available first-time buyers is at an all-time low. Rural areas are feeling the strongest pinch, but urban and suburban locales are also lacking that layer of the market.
The efforts of real estate agents, sellers, and mortgage pros seem fruitless these days. Real estate professionals have shifted their focus to the aging Baby Boomer population downsizing to smaller homes and condos, or opting for active adult living communities.
The recent decrease in mortgage rates might do the trick, or so the real estate professionals hope. Where have all the buyers gone?
At the turn of the century, the housing bubble expanded rapidly, and prices rose so high, that it left first-time home buyers gasping for air.
By 2006, the bubble was ready to pop. Prices had peaked, and by mid-year, the market was on a rapid downward slide. Home prices reached new lows by 2012.
Six long years of scary times existed for every layer of the market; changed regulations locked up bank doors. Foreclosures seeped across the country like melted ice cream, and home sales were flat.
In 2009 the $8,000 tax credit, bundled with rock-bottom home prices and low mortgage rates, bumped the first-time buyers into action. They occupied 63% of the housing loan share, a huge increase from 37% in 2003.
Tax credits have since disappeared, prices of homes and mortgage rates have gone up. Is that what brought the first-time home buyer market to a halt? Although it’s a factor, some say the problem lies in the younger generation’s change of attitude toward home ownership.
Countless thousands of graduated students are underemployed, struggling to pay back student loans.
Millennials are getting married later, or not at all and think owning a house can wait until they decide to have a family. Home ownership and new cars are at the bottom of the “wants” list.
The cost of owning a home is a financial burden they would rather not take on.
Truth be told, if you were to ask a member of the current generation if they prefer to own a home, or a smart phone, the answer just might be the latter.
Falling mortgage rates may help the overall market, but the likelihood of spurring first-time home buyers to jump in is pretty slim.