The National Association of REALTORS recently reported that approximately 29 percent of today’s homebuyers are down from the “historic norm” of 40 percent. The NAR cited tight credit conditions, limited housing inventories, and steep competition from investors for the same properties as reasons for the shrinking number of first-time homebuyers.
Kevin Gillen, an economist at the University of Pennsylvania’s Fels Institute, says lower-income homebuyers have been the most affected since the housing bubble in 2007. Contributing factors include unemployment or underemployment–which hinders their ability to save enough money for a down payment– and no establishment of credit.
The shrinking inventory has resulted in an increase in home prices. Interest rates are also on their way up, which is another reason why more first-time homebuyers are still on the fence.