Meeting the challenge first-time buyers face this year
Higher home prices, bigger monthly mortgages because of higher mortgage rates, tougher lending standards, and a squeaky tight homes inventory are paving a bumpy road for first-time buyers this year.
That bumpy road is also leading to an increase in the number of renters. Some housing pundits predict that we’re in the fast lane to becoming a nation of renters. While that’s good news for investors, it doesn’t bode well for local economies or social factors that depend on homeowners’ culture.
Here are a few examples of local data that serve as signposts on where things are heading.
- Current Census data show that the number of homeowners paying more than the recommended 30% of income for housing is increasing. The pre-pandemic number here in the Tri-Cities area was 20.3%. It’s now 27.2%.
- The number of renters paying over 30% before the pandemic was 45.1%. It has decreased to 44.9%. Renters doubling up with roommates or moving back home is driving the decline. Still, there are over 20,000 local renters paying 35% or more of their income for housing.
- New household formations are declining. The local pre-pandemic number was 218,949. It’s now 215,079, a 2.2% decline.
- Owner-occupied housing is declining. The local pre-pandemic number was 71.3% of all households. Since then, it has declined to 70.6%.
There’s something else the numbers show. It’s both a challenge and an opportunity for Realtors to redouble their efforts to help first-time buyers. There are local, state, and national assistance programs that target first-timers.
First-time buyers typically account for a third of existing home sales. They’re also an important part of the group of owners who will be trading up in a few years.
NETAR is the voice for real estate in Northeast Tennessee. It is the largest trade association in the Northeast Tennessee, Southwest Virginia region, representing over 1,600+ members and 100+ business partners involved in all aspects of the residential and commercial real estate industries. Weekly market reports and information for both consumers and members are available on the NETAR website at https://netar.us