The housing market is doing well and home values are beginning to rise. However, the National Association of REALTORS® (NAR) reports that first time home buyers are remaining out of the housing market and there could be several reasons why.
According to its annual survey which evaluates the experiences, preferences, demographics, motivations, and plans of recent home buyers and sellers, the 2015 National Association of REALTORS® Profile of Home Buyers and Sellers shows a decline in first time home buyers for the third year in a row.
This year’s profile indicates first time home buyers are at their lowest in nearly 30 years. The survey registered this classification of buyers at its second lowest level since NAR started conducting the annual survey back in 1981.
Numbers show the share of buyers closing on their first home, including homes for sale in Coral Springs, dropped to 32 percent. This is a one percentage drop from 2014, and only slightly better than the lowest ever recorded by the NAR survey, which was in 1987 at 30 percent.
The survey results take into account owner-occupants and do not include vacation homes or investment buys of real estate property. When looking back, the average long term numbers show historically that about 40 percent of primary home purchases are from first time buyers.
Absence of First-Time Buyers
So where are the first time home buyers and why are they choosing to stay out of the real market and not buy homes for sale in Coral Springs and elsewhere?
According to NAR chief economist Lawrence Yun, it is perplexing. The real estate market and economics in the U.S. are looking up, along with home values and sales, all of which invite buyers. In addition, the job market for college educated individuals is a healthy one and mortgage rates have stayed persistently low.
So, why are first time home buyers staying away from entering the buying market?
High Rent Rates
One interesting factor that could be a contributing to the lack of first timers is high rent rates. The continual rise in rental rates in some areas of the country is making renting properties nearly unaffordable. It seems this would drive renters to look for homes where mortgage rates may be much lower and a much better investment. However, it may just be these high rent rates that could be part of the reason.
Having to pay high rent rates month after month makes setting aside money for a down payment difficult for those interested in buying a home of their own.
Scarcity of Inventory
Another factor that may be keeping first time home buyers from closing on their own homes for sale in Coral Springs is that the market is experiencing tighter inventories. NAR reports unsold inventory dropped to a 4.8-month supply at the current sales pace. This is down from 5.1 months in August and 5.4 months at the same time last year.
The scarcity of inventory has been seen in both new and existing homes, and it doesn’t seem to be letting up anytime soon. Although much of the country experiences a slowdown in the real estate during the fall and winter months, Florida real estate market is year round. The tightening could improve as high season hits the Coral Springs real estate market or it could become even tighter.
One interesting tidbit the NAR survey found is that nearly 90 percent of all respondents enlisted the help of a real estate professional when buying or selling a home. This caused the share of sales that were for-sale-by-owner to their lowest numbers ever.
