First-time homebuyers face an uphill battle as they try to navigate an evolving market.
But things may be tilting in their favor.
Thirty percent of homes sold in June went to first-time buyers, up from 27% in May, according to industry data published Wednesday.
“The market is easier for the kinds of people who didn’t like the competition that was so prevalent earlier this year,” said Daryl Fairweather, senior economist at Redfin. “If you are on the market for a home as a first time buyer, it will feel a bit easier, but it will also be more expensive.”
Home prices and mortgage rates are both on the rise.
The median sales price of an existing home was $416,000 in June, a 13.4% increase from June 2021.
There are more homes on the market and fewer people bidding, which leaves the door open for anyone who is financially prepared to make a move.
“If you were intending to put 20% down, prices are much higher now than they were before the pandemic, so that down payment is probably going to be a bit harder to come by,” said Fairweather. “If you were the kind of person who was looking for a low down payment option, maybe an FHA loan or some other subsidized loan — your mortgage payment’s going to be higher, and that’s probably what you’re more focused on, but you have a better chance of getting those kinds of offers accepted.”
A number of factors are driving potential buyers out of the market.
Almost 80% of Americans believe this is a bad time to buy a house, according to a recent Fannie Mae report.
Inflation is a key component.
“People are just stretched thin by their budgets,” Fairweather said. “With gas prices, food prices, and travel prices going up, people just have less to spend on housing. That’s putting a lid on how much home prices can go up. It really just comes down to affordability.”
Fairweather said it’s important for first-time buyers to make sure their financing is in order before making a decision, and to make sure they are buying a home they can see themselves in for the long haul.
“If you can find a home within your budget that you would stay in for at least five years,” she said, “I think now is a great time to buy.”