It’s a Good Time to be a First-Time Home Buyer
Despite some challenges and market slowdown, first-time homebuyers had a successful year last year.
According to the Genworth Mortgage Insurance First-Time Homebuyer Market Report, there were 2.07 million first-time single-family home buyers in 2018, up 1% from 2017 and the highest number since 2006.
First-time buyers generally settled on low down payments, with 1.67 million buyers (80%) opting for low down payment mortgages. 682,000 utilized traditional home loans with private home loan protection (PMI) to back their first home buy in 2018, 53,000 more than the FHA.
Fewer first-timers in last quarter
In the fourth quarter of 2018, there were 480,000 first-time buyers, down 3 percent from the same period of the previous year after a year-over-year increase of 1 percent in the previous quarter. However, the decline was more than double at 7% for repeat buyers in Q4.
Despite the challenges, first-time homebuyers accounted for 39% of single-family homes sold in 2018, up from 31% in 2014; 56% of new buying loans in 2018, up from 52% in 2014; and the highest level of first-time homebuyer mix in the housing market since 2000.
Lower priced homes sought after
The report notes that the affordability of housing deteriorated from a year ago by 17 percent in Q4 due to higher interest rates and higher home values.
Homebuyers responded by postponing buying and searching for lower – valued homes, resulting in lower costs for homebuyers in Q4 for the first time. This point is delineated by lower costs paid by approximately 80 percent of all homebuyers and 70 percent of first – time homebuyers compared to a year ago. The middle cost paid by first-time homebuyers declined by 2% year-over-year to $233,600.