March 13, 2019
How the Housing Slowdown May Help First-Time Homebuyers
While for investors and the upper echelon of the housing market a cool-down in the rise of housing prices may be something that speaks of trouble, there is a certain group of potential homeowners for whom such a market is in fact a boon: first-time homebuyers.
According to the seventh edition of Genworth’s First-Time Homebuyer Market Report, in the third quarter of 2018 first-time homebuyers took advantage of the cooling market, and the loosened inventory it provided them. While overall the slowdown—caused by the rise in interest rates in addition to the continued (though slower) rise in prices—meant a fall in the sales of new and existing homes, the market has been more resilient for first-time buyers. In fact, in what could be considered this market’s most interesting development, the sales of homes to first-time buyers has in fact risen higher than the numbers recorded for the previous year—to the tune of a rise of 17 percent. For the most part these buyers are utilizing low down payment conventional loans with private insurance to kick-start their dreams of homeownership.
Is it just their inexperience with the market that accounts for the discrepancy between these buyers and more experienced, repeat real estate purchasers? Not quite. Really it comes down to the reasons first-time buyers have for making their purchases.
Most first-time buyers have rented for the greater part of their independent lives. There have been some concerns over the fact that Millennials were slower than previous generations to get into the housing market, which can broadly be chalked up to having come of age during the fallout of the 2008 housing crisis, a great deal of student loan debt, and their tendency to marry later in life. But an overheated market that favored those who already had built equity in previous homes had something to do with it, too.
So the decrease in overall affordability and the rise in interest rates—which has caused those who already own homes to begin staying put rather than to move into situations where they’re paying much higher rates for less house per square foot than what they’ve already managed to secure—has finally cracked open the inventory door for those among the Millennial set who are prepared to buy.
First time homebuyers are often unfamiliar with problems that may occur in ownership of title—but we at Topouzis & Associates, P.C. are experts at ferreting these problems out and disposing with them in advance of closing. We take pride in the great amount and quality of experience we bring to the closing table in Rhode Island, Massachusetts, and Florida. Contact us if you want a partner in your property closing—one who makes everyone involved feel like family.