A report on first-time homebuyer trends by Genworth Mortgage Insurance has uncovered a surge in demand for housing. In fact, the demand for homes by first-time buyers has reached a record high since 2000. Data suggests that over the past two decades, the last quarter of 2017 shows the highest demand.
The report further revealed that despite this demand, however, overall purchases of homes have actually declined. According to Tian Liu, Chief Economist at the Genworth Mortgage Insurance, this trend may be driven by the imbalance in supply and demand in the housing market.
As first-time homebuyers consisted of 40% of all single-family homes sold, according to the report, nearly 60% of all the homes sold were financed through mortgages. The report also showed that the number of repeat home buyers dropped by 5% by the third quarter of 2016. According to Liu, this could be because the shortage in supply is making homes more expensive. Homeowners who want to upgrade may have limited incentives to do so, leaving fewer starter-homes available for first-time buyers.
Despite the high cost of homes, first-time homebuyers prefer to transition from rental houses, promoting the great demand. There is a great sense of urgency to leave the rental market, which is also seeing a huge cost uptick. Faced with buying an expensive home or paying expensive rent ad infinitum, the choice to buy for many is far preferable.
New, convenient mortgage products in the market are also driving many to buy for the first time. These products primarily allow homebuyers to access low down payment packages, making the process of buying homes more affordable and within reach. Private mortgage players are indeed driving this demand. According to the report, FHA loans are declining. These incentives by private entities continue to encourage more and more people to own homes for the first time. According to Liu, the future of FHA loans could be dim. Clients are gravitating towards credit enhancement that will work for their families and budget needs. With all factors staying constant in the private mortgage insurance front, it is unlikely that this surge will be calming down anytime soon.
Read more about the complicated but ultimately hopeful state of the housing market in this Professional Builder article.
Homebuilders looking to compete in the modern housing market have to be adept at effective online marketing campaigns specifically tailored to reaching and engaging the right buyers. At ASTRALCOM, we have 20+ years of experience helping homebuilders reach their highest potential. Contact us today for more information on how we can help your company harness the power of online marketing.