Chicago, IL, August 1, 2016 (Newswire.com)
Interest rates remain at historic lows, and are currently trending at the lowest levels seen in the past three years. During the first six months of 2016, mortgage interest rates have averaged 3.67 percent on a 30-year fixed-rate loan.
Yet the number of first-time home buyers in Chicago, and the nation as a whole, have dwindled. According to the National Association of Realtors®, first-time home buyers accounted for 32% of all home buyers during 2015, the lowest since 1987. Historically, first-time buyers represent about 40 percent of the market. The decline comes even as job prospects and incomes have strengthened in recent years.
Ryan Gable, founder and CEO of StartingPoint Realty, has a simple explanation for the disparity between low mortgage rates and fewer first-time home buyers.
“First-time buyers are not motivated by low rates,” explains Gable. “The real estate industry focuses on the economics of home buying, but first-time buyers aren’t looking at the issue mathematically. The big question they ask is, will home ownership improve their lifestyle?”
Gable says that for some prospective buyers, the answer is no. “Young adults today are more mobile in their lifestyles and careers. They aren’t in a rush to get married or start families. They’re also likely to change jobs frequently. Home ownership, while looking great on paper, can seem like a limitation of their life choices. Keep in mind, this is the same generation that isn’t excited about car ownership.”
Since StartingPoint Realty specializes in serving first-time home buyers, Gable hears what motivates them. “In many cases, it’s about family; either starting their own, or wanting to live close to relatives, and have room for gatherings. Some buyers are very analytical and see home ownership as a financial benefit. But for the most part, it’s an emotional decision based on lifestyle preferences.”
Gable acknowledges that there are financial barriers to home ownership that can hold back first-time buyers. “The challenges of student loan debt, high rents, rising home prices and slow-growing incomes are very real. Yet these challenges can be overcome with proper planning and home buyer education.”
Source: StartingPoint Realty