Is Homeownership Just a Dream for First–Time Homebuyers?
It looks like the sluggish US housing market is finally giving first-time American Homebuyers a glimmer of hope. Of course, they’ll have to cough up a lung or two to afford it. The most unaffordable housing market in almost four decades. Sounds very impressive to me. And don’t forget the joy of competing with all those wealthy investors. Who needs an easy and stress-free home-buying process, right?
So, for all you first-time homebuyers out there, keep saving those pennies and dreaming of homeownership. If you’re lucky enough, maybe one day you’ll get yourself a overprice shoebox of a home in a questionable neighborhood.
The Bitter Reality Of First–Time Homebuyers in the US Housing Market
The National Association of Realtors has some bad news for those first-time buyers out there. Apparently, they made up the smallest shares of sales on record last year, at a depressing 26%. Don’t worried though, it not like anyone of them want a piece of the American dream anyway. With spring homebuying season coming up, the already-scarce inventory is not going to surprisingly multiply. Nah, that would be to easy. Instead to make it harder for the average American, all the opportunity to own a single-family house with a yard or even a starter condo is going to those already have a financial advantage. The joy of capitalism.
So, what does this all mean? Well, the American Dream of homeownership is reserved for the elite. If you’re not one of the elite or have access to mom and dad bank account, tough luck, kiddo. The rest of us peasants are left out of the opportunity to build wealth through homeownership. According to Nicole Bachaud, senior economist at Zillow Group Inc., we’re lightyears away from making homeownership affordable for the masses.
The scales are clearly in the favor of those with higher incomes and better financial background. Honestly, at this point, if I were you, I would just buy a house in the Metaverse. It probably cheap, not real and the best part is, you get the feeling of owning a real home. I wonder if its actual gaining value overtime.
The Financial Struggles of Home Buying
The struggles of being a first-time homebuyer is real and its only getting realer. The pandemic did not make things any better, if any it had taking things to a whole new level. As if competing with the rich wasn’t hard enough, first time home buyers were force out of the US Housing Market altogether. A typical house income for first-time buyers skyrocketed from $70,000 in 2019 to about $90,000 in 2022, a 29% increase.
Just when you thought things couldn’t get any worse for first time-buyers, along comes the rapid rise in borrowing costs. When mortgage rates hit a whopping 7% last fall, it’s no surprise that many first-time buyers were left in the dust. According to Zillow, it would take nearly a decade for someone saving just 5% of the median household income every month to build up a 10% down payment on a typical home.
But wait, don’t go! It gets better (or worse, depending on whose perspective). The entry-level supply of homes is still tight, with the inventory of the country’s cheapest houses down 1.5% in January from a year earlier. In the other hand, the most expensive properties saw an increase of 37%.
The Unequal Opportunity of Home Ownership in the US Housing Market
Isn’t this lovely? Not only that first-time buyers are struggling to enter the housing market, but the increasing gap between the haves and have-not is inflating the wealth gap and racial inequalities. For Blacks and Latino families who never owned a home, getting their foot in the wealth door is very difficult. As Jenny Schuetz, a senior fellow at the Brookings institute’s Brookings Metro, states, this also hinders the type of generational wealth that can help some first-time buyers get a leg up in the first place. It’s as if the system is rigged against certain groups of people. Oh wait…it is.
The American Dream of homeownership slipping further and further away from the reach of young people. Things seems to be getting better, with the median age of first-time buyers has jumped from a youthful 29 in 1981 to a measly 36 in 2022. This makes it the oldest in the National Association of Realtors’ records.
When Friends and Family are the Key to Homeownership
Even those with well-paying jobs are struggling to afford a home. According to Bloomberg, Maddy Duleyrie, a 29-year-old New Jersey native, was only able to buy a condo in Manhattan’s west village with the help of her parents. “I don’t know how anyone could afford a home on their own at my age,” she lamented.
The generosity of family and friends. It seems like financial help for down payments is becoming the new thing. In fact, in Dallas, at least half of young first-time buyers are receiving all of their minimum down payment from their loved ones. I guest it pays to have friends in high places… or at least friends with deep pockets.
In conclusion, the real issue here is the lack of affordable homes available to first-time buyers. It’s like trying to catch a unicorn these days. Until we figure out a way to make homeownership more accessible and affordable, the American Dream will remain just that- a dream. So, keep on dreaming, and maybe one day you’ll wake up in a world where buying a home isn’t just for the privileged few.
