2023 First-Time Home Buyer Profile: Insights and Trends
As 2023 continues to be a challenging year for the housing market, many first-time home buyers are finding themselves adjusting their expectations or even delaying their plans to buy a home. The recently released NAR 2023 Profile of Home Buyers and Sellers sheds light on the latest trends and shifts in the market. In this article, we will explore these trends and their implications for first-time home buyers.
First-time Buyers: Older and More Diverse
While the median age of first-time buyers dipped slightly from 36 in 2022 to 35 in 2023, it remains higher than the historical average. This is largely due to the lack of inventory and elevated home prices in the market, making it harder for buyers to find and afford a home. On a positive note, first-time buyers are becoming more diverse, with an increase in Hispanic/Latino, Black/African American, and Asian/Pacific Islander representation. This year, first-time buyers made up 32% of all buyers, a significant increase from last year’s low of 26%.
Growing Income, Debt, and Down Payments
First-time home buyers saw a boost in their median income to $95,900, which is $24,900 more than last year. This increase in income was necessary for buyers to remain competitive in the market, as the typical down payment on a home rose from 6% to 8% this year – the highest since 1997. However, 38% of buyers who saved for a down payment reported it as the most difficult part of the home-buying process, with high rent and mortgage payments delaying 56% of first-time buyers. To offset their debt, many first-time buyers cut spending on non-essential items and began using financial assets such as stocks, bonds, and 401k or pension funds as down payment sources.
Home Preferences: Single-family, Suburban Homes with More Space
The majority of first-time buyers purchased single-family detached homes with three bedrooms and two bathrooms. When it came to compromises, buyers were most willing to negotiate on price (38%) and the condition of the home (31%). Most first-time buyers (44%) opted for homes in suburban areas with a median size of 1,670 sq ft, emphasizing the importance of space and cost of living in their decision-making process. The number of first-time buyers purchasing homes in urban areas also increased this year, as many companies mandated a return to the office and higher income levels allowed for affordability in these areas.
While the housing market remains challenging for first-time buyers, the trends in the 2023 Profile of Home Buyers and Sellers reveal that they are adapting to the current market conditions and finding ways to overcome obstacles. With a more diverse demographic, increased income levels, and a focus on suburban living, first-time home buyers are continuing to navigate the market and make their dreams of homeownership a reality.
For more information on housing, demographic, and economic trends, be sure to check out Jessica Fulk Real Estate and our other articles on the housing market in Mission Hills, Overland Park, Leawood, and other areas in Kansas City.
Orginal article: Link To Article – provided by Kansas City Realtors