According to Realtor.com’s Active Home Shopper Report, the 2017 home buying season will see a large increase in first-time homebuyers. Find out what else it predicts.
Good news, according to Realtor.com’s Active Home Shopper Report, there will be an increased demand for suburban homes. The bad news—buyers will also face greater affordability challenges. The study, based on September survey data of active shoppers on realtor.com, analyzes responses from consumers who plan to purchase homes in the spring or summer of 2017.
According to the report, the percentage of first-time homebuyers could rise as high as 52 percent of all buyers, an increase from 33 percent in 2016.
But, this boost in first-time buyers will also make affordability, down payments and credit scores a challenge, and those issues could become the market’s top problem next year. Currently, the limited inventory of listings is the top barrier to homeownership.
In general, suburban homes are preferred by 43 percent of first-time homebuyers surveyed, likely due to their desire for safe neighborhoods, privacy and the needs of growing families.
Here are the study’s top five predictions for 2017:
1. First-time homebuyers could make up a majority of 2017 homebuyers. According to the survey, first-time homebuyers make up 52 percent of prospective buyers looking to purchase in 2017. Millennials lead the pack with 61 percent of potential first-time buyers under age 35. Top reasons cited by millennials for buying: getting married or moving in with a partner, growing tired of their current living space, and planning to increase family size.
2. Affordability and mortgage qualifying expected to replace lack of inventory as largest barrier to homeownership. In 2016, 40 percent of home shoppers cited the lack of inventory as the largest barrier to homeownership, but realtor.com reports this will potentially shift to affordability and mortgage qualification issues as more first-time home buyers enter the market. Of first-time buyers planning to purchase next spring, 37 percent said their largest impediment to homeownership is the down payment, and 30 percent said finding a house within their budget.
3. Safe neighborhoods, more living space and larger yards top list of key home attributes. Safety, more living space and larger yards as key features is consistent with their top goals of buying: attaining privacy and addressing the needs of their families. A third top objective of first-time buyers is to make a financial investment that will grow over time.
As millennials marry and move in with partners, reasons to purchase are driven by actual or planned growth in their families, and they show strong preference for single-family homes (39 percent) or townhomes (34 percent), and away from multi-family homes (15 percent), condos (10 percent) or mobile homes (2 percent).
4. Competition for the suburbs should heat up. With families and safety on the brain, it’s no surprise that first time homebuyers identified the suburbs as their No. 1 preferred location. In fact, 50 percent of all respondents identified suburban areas as their preferred location. For boomers, their desire for the suburbs can likely be attributed to their desire to be close to family and friends.
5. Spring and summer will continue to be 2017’s hottest time to buy a house. A majority of all survey respond-ents were beginning the housing search at the time of the survey and planned to purchase in seven months or longer, indicating spring and summer will continue as the top seasons to buy and sell homes: 73 percent of respondents had been considering homeownership for less than three months and did not expect to purchase a home immediately.
For more information and to read the study, go to http://research.realtor.com/september-home-shoppers.
This article originally appeared in the December 2016 issue of the REAL Trends Newsletter and is reprinted with permission of REAL Trends Inc. Copyright 2016