Published on Feb. 5th, 2016
The Greater Boston housing market is booming, but the first-time buyers are not purchasing homes in the Massachusetts real estate market. Of all the home purchasers, only 32% of them are first-time home buyers. This is the lowest rate in the last 30 years.
The conditions in the market are favorable right now. However, despite lower mortgage rates, rising rents, and jobs for college grads, the first-time buyers are not purchasing homes. The higher home prices and the cost of rents are a hindrance to the first-time buyers because they have to save a lot of money for a down payment according to a recent survey. There’s also fewer entry-level homes in a price range that new buyers are able to afford. Other buyers feel that they won’t be able to qualify for a mortgage.
In the Boston real estate market, the debt of potential buyers is another reason why they are putting off buying a home. They don’t have enough money for a down payment or money left over to pay mortgage payments. Student-loan debt is blamed for the lack of buying in over half of survey respondents.
Young people still want to buy a home as there’s a desire to own by 64% of respondents and not rent. This desire to own has gone up by 11% from last year. Those that have bought before stated that they want to own a larger home. Although the housing prices are high, they feel that with lower interest rates, now is a good time to buy. 80% of the respondents felt that owning a home was a good long-term investment and 43% said that owning a home was a better investment than the stock market. Despite these facts, home ownership in the U.S. is at its lowest level in 50 years which is 63.4%.
They survey also found that cash purchases make up a large portion of home transactions. Many still needed mortgages, but this dipped down somewhat. 50% of first-time mortgage buyers felt that the process was more cumbersome and extensive than they had hoped for.
In the Boston area, there are high FICO credit scores, which is the highest average in history. More people are qualifying for mortgage loans and this is even the case among middle-income Hispanic and black borrowers, despite the fact that they are small percentage of those buying homes in the Boston area.
In the market today, buyers are using mobile apps and visiting real estate websites on a more frequent basis to look for mortgage rates and to view properties. Buyers today tend to make quicker decisions and take action on a property they like. It takes them about 10 weeks to buy, whereas in 2009-2013, this took 12 weeks.
First-time buyers in Boston should be aware of the lower mortgage rates. If they have good credit, they can get financing with a low rate. Rents and homes are priced high, so they need to make a purchase when it’s right for them.