Even though home prices continue to skyrocket, first time buyers are still surpassing repeat buyers shopping for a home, according to a recent report from the Urban Institute.
Of course this is not a new trend as first-time homebuyers have dominated the real estate market for the last decade, but the latest research indicates that the amount of first time buyers is increasing.
FHA Loans Are Popular Among First Time Homebuyers
Unsurprisingly, Michigan FHA loans, are the most popular among first time buyers. This makes sense as FHA loans make homeownership more attainable with low down payments and lenient credit requirements compared to conventional loans. Out of all FHA home buyers, first time buyers made up 80% of the group. This number dropped to around 75% during the housing recession but today that number is up to 83%.
The amount of first-time homebuyers with conventional loans was less, at 25% during the early 2000s and increased to 40% during the housing bubble. Although it fell after the housing crash, that number is up again in today’s market with first time homebuyers making up 50% of the buyers.
What is Causing the Increase of First Time Homebuyers?
This influx of first time buyers can be a result of less people selling their home and becoming a repeat buyer. During 2001-2007, repeat buyers purchased up to 1.8 million homes per year. However that has dropped to just over 1 million today.
Homeowners who are locked into a lower mortgage rate may be hesitant to get into a higher rate as a repeat buyer. Also, sellers are not interested in paying more money for less home, due to rising house prices.
Related: Michigan FHA Lender Explains Reasons for Shortage of Homes
The Home Depot recently reported a surge in sales during the second quarter of 2018. This is an indication that homeowners are remodeling and upgrading their homes instead of selling.
Homeowners holding on to their homes coupled with decreased home construction, will only cause less inventory, resulting in home prices increasing even more.
About Michigan FHA Lender, Julie Krumholz
Julie Krumholz has over 30 years in the mortgage industry and specializes in helping first time home buyers with Michigan FHA Loans.
Whether you are a first time buyer or a repeat buyer, Julie is ready to help you through every step of the home buying process.
Contact Julie Krumholz by Calling: 586-382-5482.
Or, click here to apply for a Michigan home loan now!
