New Zillow research finds the share of first-time buyers has
hit 50%, the highest level in years
SEATTLE, Aug. 23,
2023 /PRNewswire/ -- Half of all home buyers are
purchasing their first home, the highest share that Zillow has ever
recorded. Zillow's 2023 Consumer Housing Trends Report finds
that first-time buyers now make up 50% of all home buyers, up from
45% last year and a meaningful jump from 37% in 2021. The share of
first-time buyers likely hasn't been this high since around 2010,
when there was a first-time home buyer tax credit.
First-time buyers are making gains relative to repeat buyers.
Zillow research finds a vast majority of homeowners with
mortgages have locked in a rate below 5%, and are almost half as
likely to consider moving. It's true that first-time buyers make up
a larger piece of a smaller pie, as home sales and inventory
shrink. However, this significant rise in the share of first-time
buyers helps explain what's driving demand and keeping upward
pressure on prices in a market with mortgage rates surpassing
7%.
"High mortgage rates and a shortage of inventory is keeping
would-be repeat buyers in their current homes," said Zillow senior
population scientist Manny Garcia.
"A greater relative share of first-time buyers is filling the gap,
and they're competing against each other for the limited number of
affordable starter homes on the market."
Affordability is the greatest hurdle for first-time home buyers.
It now takes nearly 12 years for a typical first-time buyer to
save up for a down payment, compared to nine years prior to the
pandemic. Meanwhile, the typical monthly home payment has more than
doubled in that time. Yet the growing share of first-time buyers
suggests many are getting creative to make homeownership a
reality.
Zillow's report finds that most first-time buyers are
tapping at least two sources to finance their down payment (60%),
most commonly their savings and gifts from family or friends. Down
payment assistance can help, and available programs are included on
every for-sale listing on Zillow.
There are other tools helping first-time buyers anticipate and
manage monthly costs. A new app filter on Zillow allows
shoppers to search for homes by monthly mortgage cost, instead of
by list price. In addition, a growing share of buyers are paying an
upfront fee to reduce the interest rate on their mortgage and in
turn, lower their monthly payment. Research from Zillow Home Loans
finds nearly 45% of conventional primary home borrowers bought
points to ease monthly costs, compared to 30% who did the same in
2021.
Nearly half of first-time home buyers are millennials (49%), a
massive generation of adults ages 29–43 who are fueling fundamental
housing demand as they hit their prime home-buying years. Gen Z
adults between 18 and 28 years old are hot on their heels, making
up more than one-quarter of all first-time buyers (27%).
These younger buyers are debunking the "lazy millennial" myth by
working harder during the home-buying process. Zillow's report
finds that first-time buyers are more likely to contact at least
three real estate agents and three mortgage lenders, compared to
repeat buyers. They're also more likely to make at least two offers
on homes, and are more likely to report being denied a mortgage at
least once before they're approved for a loan. First-time buyers
are seeing their persistence pay off for a piece of the American
Dream, and many still believe the opportunity to build equity
outweighs today's higher costs of entry.
About Zillow Group:
Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate
to make home a reality for more and more people. As the most
visited real estate website in the United
States, Zillow and its affiliates help people find and get
the home they want by connecting them with digital solutions, great
partners, and easier buying, selling, financing and renting
experiences.
Zillow Group's affiliates, subsidiaries and brands include
Zillow®; Zillow Premier Agent®; Zillow Home Loans℠; Trulia®; Out
East®; StreetEasy®; HotPads®; and ShowingTime+℠, which
includes ShowingTime®, Bridge Interactive®, and dotloop®.
All marks herein are owned by MFTB Holdco, Inc., a Zillow
affiliate. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS
#10287 (www.nmlsconsumeraccess.org). © 2023 MFTB Holdco, Inc., a
Zillow affiliate.
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SOURCE Zillow, Inc.