Despite soaring home prices, a limited housing supply, and strong market competition, the percentage of first-time buyers who became homeowners during the pandemic rose to 34% over the past year compared with the previous year’s reported 31% of completed first-time home purchases, Realtor.com reports.
In part, the increase in first-time homeownership was a result of a larger share of buyers in the market as well as the ability of many first-time buyers to live at home with family during the pandemic to save money before buying a house. Remote work options also gave more buyers the flexibility to live outside of expensive areas where homes on the market were scare and less affordable.
“We have seen more first-time buyers taking advantage of the ability to live at home with family members during the pandemic and move directly into homeownership,” says Jessica Lautz, NAR’s vice president of research.
“That’s given first-time homebuyers a leg up. They’ve been able to save for a down payment without paying rent and be able to pay down debt,” says Lautz.
The typical first-time buyer was 33 and had a median household income of $86,500 in 2020.
First-time buyers were helped by record-low mortgage interest rates, which dipped below 3% earlier this year. The lower rates helped to offset higher home prices.
Plus, there were simply more millennials who aged into typical home buying years, which helped add to the share of first-time buyers in the market.
“The ability to work remotely or work half of the time in the office and half of the time at home allowed homebuyers some flexibility to look outside of expensive areas” as well, says Lautz. If buyers didn’t have to commute every day, many were willing to move farther outside of the bigger cities.