First-time home buyers are increasingly saying they are getting shut out of the market, losing out on bids on for-sale homes to investors who are willing to pay all cash or home buyers willing to pay larger down payments.
"I thought it was a buyer’s market ripe for the picking," says Washington, D.C., home buyer Jason Leggett, 25. Leggett says he lost out on six previous bidding wars for a home before finally snagging a home after beating out four other bidders.
More than 53 percent of first-time home buyers use Federal Housing Administration loans, which have a minimum down payment of 3.5 percent. But FHA loans can sometimes require home sellers to do home repairs, so sellers may be more tempted to consider other offers they receive than FHA offers, real estate professionals report. FHA loans also can take buyers longer to close than buyers coming with all-cash or conventional loans.
First-time home buyers generally account for a big bulk of the market, about 40 to 45 percent, according to the National Association of REALTORS®. More recently, they’ve made up about 35 percent of home buyers. The tightening of credit by many banks continues to keep many out, says Lawrence Yun, NAR’s chief economist.
Source: “Housing Isn’t a Buyer’s Market for Many First-Timers,” USA Today