First-Time Homebuyers Are Absolutely Screwed Right Now• https://www.zerohedge.com, by Tyler Durden
For the first time since records began, first-time homebuyers made up the smallest share of sales last year at 26%. And as we noted on Thursday, a surge in mortgage rates above 7% have sent homebuyer applications to a 28-year-low across all age groups.
Now, as the spring homebuying season approaches, tight inventory and uncomfortably high interest rates mean that the American dream can only be achieved by those with high-paying jobs, lots of money, or rich parents, Bloomberg reports.
The average rate for a 30-year, fixed mortgage climbed for a fourth straight week, reaching 6.65%, Freddie Mac data released Thursday show.
The difficulties for first-time buyers have been escalating for years. During the pandemic boom, they were frequently squeezed out as they competed against people with cash and investors who frequently target starter homes. The typical household income for first-time buyers soared to as much as $90,000 in 2022 from about $70,000 in 2019. -Bloomberg
"We're far from affordability for the masses," according to Zillow senior economist, Nicole Bachaud. "The scales are shifted toward homebuyers with higher incomes and a better financial background. This will be the norm until we get more inventory in the market."
When mortgage rates hit 7% towards the end of 2022, Zillow predicted that it would take around 10 years for an individual saving 5% of the median household every month to set aside enough for a 10% down payment on a typical home (and are banks even taking 10% down?). What's more, supply of entry-level housing remains tight, with the inventory of America's cheapest properties down 1.5% in January vs. the same time last year, while supply for the most-expensive properties jumped 37%.