Even though the housing market is in a much more stable state now than it has been since the recession, it would seem that first-time home buyers are still currently absent from house purchases, according to KMTV News CBS of Omaha, NE.
Issi Romem, chief economist at BuildZoom.com, publicly raised the question recently of whether or not the 10% higher incomes of young buyers as compared to a decade ago could be stifling the country’s economic recovery.
A 2009 survey from American Housing Data showed the average age of first-time home buyers was 34, while in 2012, the National Association of Realtors estimated the average age to be 31.
The average household income for first-time buyers is now almost $85,000, up from $78,000 between 2004 and 2007.
“The ability to transition into home ownership is gradually becoming the privilege of a narrower group of first-time buyers that is more financially select,” Romem says.
Purchases by first-time buyers are vital to the economy because they encourage sales for other homeowners, who may be trading up from their starter homes.
“A shortage of first-time buyers will cause the equivalent of famine in the housing market: a slowdown in home sales and presumably also in prices,” continued Romem.
Now that the housing market is being flooded by all-cash buyers, young adults are being forced into expensive rentals or to move back in with parents.
All markets are different but, on average, you’re going to pay five-to-six percent of the sale price to your Realtor. So, for example, if you sell your house for $300,000, you’ll have to pay a commission of around $18,000.
Fortunately for these young professionals, some organizations are well aware of this issue and are offering programs to make housing more affordable.
As Housing Wire reports, one such collection of programs called the Common Sense Lending Initiative was instituted in 2015 by the private residential mortgage lending company, Network Funding.
The goal of this initiative is to help people receive financing they would otherwise normally not be approved for due to adverse financial events.
One of Network Funding’s success stories involved a firefighter and a teacher whose house went into foreclosure three years ago after falling on hard financial times. (A story that’s all too common, as research shows that 250,000 new families enter foreclosure every three months.)
Underwriting government loan limits and guidelines prevented the couple from getting a loan. However, Network Funding provided them with a chance to purchase a home four years before other lenders would have allowed.
“We get a lot of pleasure from serving those who are serving our communities. With our Common Sense Lending programs, Network Funding has the opportunity to help credit-worthy families realize the American dream,” said President Matt Kiker.
The Common Sense Lending Initiative encompasses five main policies, including the Homeowner’s Access Program, Fresh Start Program, Investment Property Program, Jumbo Alternative Program, and the Foreign National Program.