The Future of First Time Homebuyers

Since the Great Recession, Americans have exhibited caution and restraint when it comes to purchasing a home. This is especially true of first time home buyers, who are trying to get their foot into the door when it comes to the real estate market. However, with property prices on the rise, one has to wonder if first time home buyers will simply have it tough. Read on to find out who prospective first time home buyers in the United States are and what they will find themselves up against in the coming years.

History

The demand for homes in the United States has been seriously affected by the large Baby Boomer population. For the past ten years, the Baby Boomers have made up the majority of the population. Considering that most Baby Boomers bought their first home, started families, and settled down ages ago, it’s easy to see why demand for housing has slowed. However, that is changing. As Baby Boomers age, a new demographic called the Millennial Generation is emerging. In 2014, the Census Bureau indicated in a report that 23-year-olds formed the largest cohort, followed by 24-year-olds and 22-year-olds.

First Time Home Buyers

In the coming years, Millennials will age enough to start considering settling down, starting families, and as a result, purchasing their very first homes. Over the next five years, experts suggest that Millenials will be behind approximately two-thirds of all newly-formed households. This year will mark the first year that Millenials will leave their mark on the real estate world, especially in more affordable regions of the United States such as the Midwest and the South. However, with Millennials comes a change in the types of housing in demand. Millennials are more likely to live in urban centers, opting for apartments, condominiums, and townhomes over traditional single-family homes. However, space is a problem in many cities and as young people continue to demand it, housing prices will increase.

New Policies in Place

The United States government has made changes to policies on government-backed mortgages in order to help first time home buyers. The Obama administration indicated in January 2015 that premiums on Federal Housing Association home loans would drop from 1.35 percent to 0.85 percent – a move that could save both first time home buyers approximately $900 each year. Lenders are also changing their policies; some are willing to accept down payments that cover as little as three to five percent of the total cost of the property. All of these changes are designed to help first time home buyers who may find themselves without the savings to purchase their first home.

Quick Wrap Up

As the United States economy continues to bounce back from the Great Recession, the housing industry will grow steadily. First time buyers are likely to be Millennials, who are willing to compromise space to live in urban centers. For this demographic, increasing employment rates and policy changes that make it easier for first time buyers are likely to help them to get their foot in the door when it comes to real estate.