For the first time since records began, first-time homebuyers made up the smallest share of sales last year at 26%
Despite a recent softening in the US housing market, a combination of rising borrowing costs and still-high prices have put prospective first-time homebuyers in a serious bind.
The difficulties for first-time buyers have been escalating for years. During the pandemic boom, they were frequently squeezed out as they competed against people with cash and investors who frequently target starter homes even though the typical household income for first-time buyers soared to as much as $90,000 in 2022 from about $70,000 in 2019.
Zillow has predicted that it would take around 10 years for an individual saving 5% of the median household every month to set aside enough for a 10% down payment on a typical home.
What’s more, supply of entry-level housing remains tight, with the inventory of America’s cheapest properties down 1.5% in January vs. the same time last year, while supply for the most-expensive properties jumped 37%.
