First-time homebuyers always want to know “is it the right time to buy a house?”. With how unpredictable the market can be, there’s no way to predict when the exact right moment will be.
Is now a good time for first-time buyers?
The answer is not so straightforward. At the time of this article’s publishing (Spring 2022), we are in a seller’s market. A seller’s market means that there is a lack of inventory or houses on the market, interest rates are low, and prices are high. This doesn’t mean you shouldn’t buy during a seller’s market, after all, interest rates are lower. However, whether or not you should buy totally depends on your financial situation. Unfortunately, interest rates are slowly on the rise once again.
Prices are likely to steadily increase, so if you’re anxious to buy a home it may be best to strike while interest rates are still reasonable and before home prices increase again. Another obstacle for first-time homebuyers is that houses are being so quickly that many buyers are offering over the asking price to secure the home. Some homebuyers can take to putting down a larger down payment or submitting all-cash offers.
Some first-time homebuyers may opt to wait to buy a home when there are fewer buyers to contend with.
What are the two largest obstacles for first-time home buyers?
Our first big challenge for first-time homebuyers is having enough money for a down payment. Typically, lenders want a 20% down payment for a home loan. Of course, there are exceptions to this, such as FHA loans, which can require as little as a 3.5% down payment. Loans that don’t require full down payment, but will likely require borrowers to get private mortgage insurance to protect lenders from borrowers who may default on payment. Fortunately, once enough equity is built up on the property this insurance will no longer be required.
USDA loans for rural areas and VA loans for veterans and service members may not require any down payment at all if you qualify!
For more information about how to prepare yourself for purchasing a home, read our blog about How to Get Your Finances in Order Before Buying a New Home.
The second big challenge for first-time home buyers is finding a home! With so many factors to consider when purchasing a home, it can be hard to find just the right place. Home prices on the rise don’t help, as many are looking to purchase detached, single-family homes. You may find your dream home is thousands above your budget, location, size, and recent upgrade can all drive up the price of a home.
First-time homebuyer stats
The average first-time homebuyer is 33 years old
The average median income for first-time homebuyers is $55,479
34% of homebuyers were first-timers in 2021
The average credit score for a first-time homebuyer is 725
The average down payment for first-time homebuyers is $8,220
The average size of a first-time buyer’s house is 1,600 square feet, and the majority of these homes are detached, single-family homes
For more first-time homebuyer stats, check out this page from Self. inc