High number of first-timers now buying homes

Associated Press

WASHINGTON

For years, the U.S. housing market looked bleak for young couples hoping to buy their first homes but struggling with high student debt, low pay and meager down-payment savings.

But a new survey by the real estate firm Zillow suggests that first-time buyers may be entering the market in greater numbers than industry watchers had assumed.

Over the past year, the survey found, nearly half of home sales have gone to first-timers. That’s a much higher proportion than some other industry estimates had indicated. And it comes as a surprise in part because ownership rates for adults under 34 are at their lowest levels since the government began tracking the figure in 1994.

Zillow’s survey results suggest the trend is shifting, and that some of this year’s growth in home sales has come from a wave of college-educated couples in their 30s, who are the most common first-time buyers.

They are people like Natasja Handy, a 32-year-old lawyer and new mother. She and her husband, a doctor, are about to close on their first home in the Northeast section of Washington, D.C. – a row house with about 1,900 square feet that cost $720,000.

The couple worked with brokers at Redfin and made a 5 percent down payment after having lost two bids on other homes.

“We waited a very long time to purchase our first house,” Handy said. “We’ve always felt like we were giving someone else our money, instead of putting it into something we own.”

In suburban Minneapolis, few first-time buyers have enough savings for a down payment, and many rely on gifts or loans from relatives, said Marcus Johannes, an agent with Edina Realty.

“Most of my people, they get funds from family,” he said. “They get creative tapping 401(k)s.”

If the pattern in Zillow’s survey holds, it could raise hopes that today’s vast generation of 18-to-34-year-old millennials will help support the housing market as more of them move into their 30s.

Here’s a breakdown of Zillow’s key findings:

Forty-seven percent of purchases in the past year went to first-time buyers. Their median age was 33.

It’s become harder to realize the dream of home ownership without a college degree. Sixty-two percent of buyers have at least a four-year college degree.

Older Americans aren’t just downsizing; they’re also upgrading.

The so-called “silent generation” – those ages 65 to 75 – bought homes in the past year with a median size of just 1,800 square feet, about 220 square feet smaller than the homes they sold.