First-time homebuyers are an endangered species in the U.S.
What to know about home prices if you're looking to buy or sell
What to know about the housing market
What to know about the housing market
The dream of homeownership is fading for millions of Americans.
Figures from the National Association of Realtors (NAR) show that only 24% of housing sales last year were by first-time homebuyers — that's down from 50% in 2010. The typical purchaser is also older than in the past, with an average age of 38, or about 10 years above historical norms.
Such trends reflect the challenges of climbing on the property ladder as home prices hover near record highs, inventory remains low and with mortgage rates at their highest level in years.
"There are fewer first-time homebuyers and they are older than we've ever seen, both because of headwinds inside and outside of the housing market," NAR deputy chief economist Jessica Lautz told CBS MoneyWatch.
Opportunity missed
Americans who are shut out from buying their first homes miss out on an opportunity to build wealth through homeownership, Lautz said.
"It's their biggest asset, and with the delay into homeownership first-time homebuyers are losing about 10 years of housing wealth. And that's for those who can enter into the market," she said. "For those who can't, they lose out on housing wealth by not having that as the biggest asset in their nest egg."
Only about 1 in 5 listed homes in March were affordable for households with $75,000 in annual income, according to a NAR analysis of property listings. Today, a household with annual income of $50,000 can only afford 8.7% of listings, down from 9.4% a year ago, according to the data.
"The lack of homes, especially at affordable price points where they would be entering the market, has been plaguing first-time homebuyers for the last several years," Lautz said. "It's been a continual issue, especially with interest rates. It makes the cost of homeownership quite high."
Along with inadequate construction of affordable housing, many existing homeowners are reluctant to sell their properties given their lower mortgage rates.
"People who are homeowners have no motivational factors to move, so that's not freeing up inventory," Lautz said. "It's almost created a hoarding situation for those in low-interest rate mortgages who don't want to separate from them."
Financial squeeze
Other factors are making it hard for people to buy a first home. The high cost of rent gets in the way of saving for a down payment, while credit card debt, car loans and child care costs also hold first-time homebuyers back. More recently, meanwhile, the resumption of student loan payments is putting many people under financial pressure.
Some Americans are managing to save enough for a first home by temporarily moving in with family or friends to minimize the cost of rent, Lautz said. But that approach isn't viable for everyone.
"It has been a pathway to ownership for some. But for someone who is 38-years-old, moving in with mom and dad can get uncomfortable," she said. "For an older homebuyer, that might be less attractive for everyone involved."
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Bloomberg
37 minutes ago
- Bloomberg
S&P 500 Ekes Out Gain as US-China Talks to Resume
Bloomberg Television brings you the latest news and analysis leading up to the final minutes and seconds before and after the closing bell on Wall Street. Today's guests are Ed Ludlow, Bloomberg News, Ross Gerber, Gerber Kawasaki, Daniel Flax, Neuberger Berman, Tony Wang, T. Rowe Price, Chris Palmeri, Bloomberg News, Sinead Colton Grant, BNY Wealth, Angelo Zino, CFRA Research, Justin Bibb, Cleveland Mayor & Leonardo Williams, Durham Mayor, Alicia Caldwell, Bloomberg News, Gregory Valliere, AGF Investments, Pooja Sriram, Barclays. (Source: Bloomberg)
Bloomberg
43 minutes ago
- Bloomberg
Trump Says China ‘Not Easy' Amid Trade Talks
Trade talks between the US and China will continue into a second day, according to a US official, as the two sides look to ease tensions over shipments of technology and rare earth elements. Dexter 'Tiff' Roberts, Nonresident Senior Fellow at the Atlantic Council's Global China Hub and author of 'Trade War' a weekly newsletter on China's economy, examines which side has the advantage in these crucial discussions. Dexter with Carol Massar and Tim Stenovec on Bloomberg Businessweek Daily. (Source: Bloomberg)
Washington Post
an hour ago
- Washington Post
Trump pushes $1,000 ‘Trump accounts' for babies
As Republicans' massive tax and spending cut bill makes its way through the Senate, President Donald Trump on Monday touted a provision in the measure that would provide every child born in the United States with a $1,000 investment account. Dubbed 'Trump accounts,' the tax-deferred investment accounts would be set up for children born in the U.S. after Dec. 31, 2024, and before Jan. 1, 2029 — covering the majority of Trump's second term. The accounts will, over the course of a child's first 18 years, track the overall stock market, and parents are allowed to contribute up to $5,000 a year to the account. The accounts will be controlled by the child's guardians or parents. Once an account holder turns 18, they can cash out and use the funds, which will be taxed as long-term capital gains, for limited purposes: they can pay for college or a job training program, open a small business or make a down payment on a first home. If the money is spent on anything else, it will be taxed as ordinary income. 'This is a pro-family initiative that will help millions of Americans harness the strength of our economy to lift up the next generation, and they'll really be getting a big jump on life, especially if we get a little bit lucky with some of the numbers in the economies into the future,' Trump said Monday. Trump promoted the program as a pro-family, pro-child initiative at the same time his administration and congressional Republicans face criticism from Democrats over cuts that the tax, spending and immigration bill would make to programs like Medicaid and the Supplemental Nutrition Assistance Program. Democrats argue the reductions would leave millions of American children and families without proper health care or nutritional benefits. Trump appeared at a White House roundtable that featured leading CEOs, including Dell Technologies founder Michael Dell, Goldman Sachs chief executive David Solomon and Uber CEO Dara Khosrowshahi. Dell said his company would match the government's $1,000 seed money in the accounts of their employees' new children. At the event, House Speaker Mike Johnson (R-Louisiana), who shepherded the tax and spending cuts bill through the House last month, said the program is a 'transformative policy that gives every eligible American child a financial head start from day one.' 'If you have a 401(k), you understand the power of investing early for the future,' Johnson said at the White House. Trump accounts were originally introduced under the 'MAGA Act' — short for 'Money Accounts for Growth and Advancement' — by Rep. Blake D. Moore (R-Utah) in May. The proposal adopted Trump's name before it was incorporated in the House Republican version of the bill, which the Senate is working on. While Trump and Johnson encouraged Senate Republicans on Monday to keep the program in the bill, it is unclear if the proposal will remain. Already, fiscally conservative Republicans in the Senate have complained that the bill doesn't do enough to cut spending, and they are looking to make substantial revisions in the House package. Republicans have not released any cost estimates for the program. But with about 3.6 million babies born in the U.S. each year, the cost could exceed $3 billion annually. The One Big Beautiful Bill — as Trump and Republicans have dubbed the tax and spending cut package — is expected to add more than $3 trillion to the national debt over the next decade, according to the Congressional Budget Office. The Trump program is similar to 'baby bond' programs run in California, Connecticut and Washington, D.C., which give some newborns investment accounts. However, while those local programs were created to reduce the wealth gap by supporting children in need or lower-income families, Trump accounts will be made available to Americans regardless of their socioeconomic status. To open a Trump account for their child, at least one of the parents will be required to have a Social Security number with work authorizations — leaving some U.S.-born children of immigrants out of the program. Economist Darrick Hamilton — who conceptualized the idea of baby bonds — told The Washington Post that Republicans' program will probably 'enhance inequality' by 'directing our public resources towards an already affluent class while at the same time, imposing … mean-spirited cuts to those who need the most.' 'It's a bad idea co-opting a good idea in both rhetoric and design,' Hamilton said. Other critics of the program said American children in poverty would be better off if congressional Republicans did not make major cuts to social safety net programs like Medicaid and the Supplemental Nutrition Assistance Program. The current tax and spending bill would make significant cuts to both programs. 'Feel like low-income families would prefer their assistance buying groceries not get cut, but that's just me,' said Center on Budget and Policy Priorities Senior Director Brendan Duke on X.
