First-time homebuyers are increasingly turning to family and friends for help in their homeownership quest, according to a new report from the National Association of Realtors (NAR).
The trade group’s 2019 Profile of Home Buyers and Sellers found that one-third of first-time buyers used downpayment help from family and friends to make their home purchase. Additionally, 23% of first-time buyers moved directly from the home of family or friends into their newly purchased home — nearly twice the historic rate of 12%. Both statistics are indicative of younger homebuyers being creative, not only in tapping their resources to aggregate downpayments, but also in saving for downpayments while saving on rent.
Such measures, however, have yet to equate to more first-time homebuyers. NAR’s data showed that the share of first-time buyers stayed flat at 33% in 2019, below the recent historical norm of 40%.
“Prerecession, the number of first-time buyers was higher, in part, because buyers had more options,” NAR President John Smaby said. “However, over the past few years, we have unfortunately experienced a scarcity in housing inventory, especially at the middle and lower end of the market.”
“Low-inventory conditions hurt would-be first-time buyers most,” said Lawrence Yun, NAR’s chief economist. “Their homeownership dream and the opportunity to build wealth gets delayed until more inventory choices reach the market.”
To Yun’s point, the median age of first-time buyers rose to 33 in 2019, the highest figure since NAR began conducting the study.
NAR’s study also found that the share of married couples who purchased their first home together continues to decline from a historical peak of 75%. The share of first-time buyers who were unmarried couples, in contrast, grew to a new apex of 17%. Those purchasing first homes as roommates doubled from 2% to 4% — another sign of buyers looking for ways to shed affordability constraints and embark upon the homeownership journey.
