Unveiling the Truth: Insights into First-Time Homebuying Trends

If you have been thinking about buying your first home, it’s easy to get pulled into exaggerated doom news and generational debates around the topic and feel as though homeownership is out of reach leaving you discouraged. However, despite the evolving landscape of first-time buyer experiences, the reality remains: ordinary individuals are continuing to achieve their dream of owning a home, and chances are, you can too.

Who’s buying their first home today?

If we were to travel back to 1981, the first year Millennials were born, the typical first-time homebuyer was 29 years old and comprised 44% of total home sales. Nowadays, Millennials—those born between 1981 and 1996—emerge as the predominant demographic among first-time buyers, with the average age of initial home purchase now at 35. In 2023, approximately a third (32%) of all homebuyers were embarking on their first home purchase, with 46% falling within the age range of 33 to 42 years old.

Let’s look at the money.

 In 2023, the average annual household income for first-time buyers spanned from $86,000 to $103,000 (the median household income in the US hovers around $75K), and most people put down 8% of the sales price to buy their first home, which primarily came from their savings. Among all homebuyers these days, 30-35% carry student loan debt between $30-$40K. When surveyed, buyers said they primarily cut back on entertainment expenses to save for their home purchase.

How are first-timers paying?

The vast majority of first-time buyers financed 75% or more of their home purchase with a fixed-rate FHA or Conventional home mortgage loan. When surveyed,  most homebuyers reported that navigating the mortgage process was smoother than anticipated, often finding it easier than expected.

What are they buying?

Before making an offer, the majority of buyers toured an average of five homes over a span of ten weeks and 87 percent of them purchased resale homes. In 2023 the quintessential first home is a 3-bedroom, 2-bathroom layout, constructed around 1978, with approximately 1700 square feet in the ‘burbs. Generally, homebuyers see themselves living in their newly purchased home for the next 10-15 years.

Not sure where to start when it comes to buying your first home? One of the most important first steps is to connect with a REALTOR®. Your REALTOR® will guide you through the homebuying process and paperwork and represent you during negotiations. Find a qualified REALTOR® here to help you get started on your own homeownership journey.

Sources:

NAR® Generational Trends

NAR® FirstTime Homebuyers

NAR® Throwback Thursday

PEW Research

US Census