The share of first-time homebuyers has continued to decline since April. In September, the share dropped to 31% from April’s 36%, according to the National Association of Realtors. April’s numbers indicate closings for February, right before lockdowns took place in March. But the annualized rate of first-time buyers increased to 2 million in September from 1.32 million in May. Current issues in the housing market make it easier for veteran homebuyers to snag homes. Competition is hot and existing homebuyers can make larger down payments with better offers.
According to the September 2020 REALTORS® Confidence Index Survey Report, the median days on market fell to a historic low of 21 days, with 76 there were three to four offers for every property that sold in September 2020.
With rising prices but with record-low mortgage rates, making the down payment is the primary challenge, rather than paying the monthly mortgage. At the median existing-home sales price of $311,800, a 3.5% down payment amounts to $10,910, and a 10% down payment amounts to $31,180. According to the 2019 Survey of Consumer Finances, the median financial asset holding (transactions account, CD, savings account, stocks, etc.) of families headed by a person under 35 years old is $8,400, so they typically won’t have enough savings for a down payment for even a 3.5% mortgage. Among families headed by 35-44 years old persons, the median financial savings is $22,700, so they will typically be able to make the 3.5% down payment but not the 10% down payment. According to NAR’s REALTORS® Confidence Index Survey, the average down payment among first-time buyers is about 10%.