The number of first-time home buyers has dwindled nationwide, according to recent data from the National Association of Realtors (NAR). First-time buyers accounted for 33% of all home purchases in 2014, down from 38% in 2013. Overall, first-time buyer activity is at its lowest level in nearly 30 years.
NAR points to several reasons behind the trend:
- Higher home prices
- High levels of student loan debt
- Slow wage growth
- Limited inventory of affordable homes
Young adults who experienced the Great Recession remain shy of home ownership, after witnessing job losses and declines in home value. Other potential home buyers who assume that low mortgage interest rates will be around for years to come. The combination of abundant caution, along with a lack of buyer urgency, keep would-be home buyers on the fence.
If you’re lukewarm about buying a home, take a look at the latest national stats on renting! CNNMoney reports that rental rates have increased by 7% in the past year. At the same time, wage growth lags far behind this trend, with wages posting a modest rise of 1.8%. Not surprisingly, rental defaults and eviction rates are on the upswing.
According to RentJungle, rental rates within 10 miles of Columbus now average $872 a month for a two-bedroom apartment. Compare that to a mortgage for a moment. Assuming a 4.5%, 30-year fixed rate mortgage, and 20% of $872 to cover monthly taxes and insurance costs, that same monthly payment would equal a $138,000 loan. And in most cases, your mortgage interest and real estate taxes are deductible from your income taxes – unlike rent!
While Metro Columbus rent increases have been modest in recent years, 2013 vacancy rates were under 5%. This means that rental supply is tight, which paves the way for higher rents.
How does the Central Ohio housing market look in comparison? The primary challenge facing first-time home buyers continues to be the low inventory of homes for sale in entry-level price ranges. As stated in our prior blog post, we still have a number of homeowners who remain in negative equity positions and cannot sell. While our real estate markets have improved, we have yet to find true equilibrium.
Central Ohio’s growing economy will keep housing demand strong for the foreseeable future. First-time Columbus home buyers might be feeling temporarily discouraged, but few are giving up on the goal of home ownership. Buyers who have their financing prepared, and who work with an Exclusive Buyer’s Broker, can succeed in virtually any metro Columbus market!
As your Exclusive Buyer’s Broker, we serve your best interests at all times. Unlike real estate agents and brokerages who represent sellers, as an Exclusive Buyer’s Broker, we only represent you, the buyer, getting you the best price and terms with no conflict of interest at all times.
Understanding this distinction could literally save you thousands of dollars not only on the purchase price and terms, but also on seller concessions and home inspection issues, whether you are a first-time homebuyer or an experienced homeowner!
Contact us with your home buying questions! Remember, we are with you every step of the way…all the way home!
Broker, CEBA, CEBA-M, CNE, CSP, ABR-M, e-PRO, GREEN
Buyer’s Resource Realty Services
Serving Metro Columbus, Ohio with Exclusive Buyer’s Agents
7100 North High Street, Suite 204, Worthington, Ohio 43085
614-888-4110 | 888-888-4110 Toll Free | 614-839-4110 Fax