The effects of a down economy over the past few years has taken its toll on first-time Boston North Shore homebuyers. Industry experts cite the inability of young Americans to accumulate savings for down payments and an unstable job market as major reasons. The result is they are sitting on the sidelines longer than ever before jumping into the home buying market.
According to the well-known real estate data source, Zillow, first-time buyers now rent for six years before deciding to buy — more than double the time from a generation ago. And, Zillow says, the average age of a first-time buyer is 33, three years older than their parents’ generation which was around age 30.
Financial Challenges Facing Boston North Shore Homebuyers
Millenials are having trouble saving sufficient cash to make down payments. But that’s not all. According to Census Bureaus reports they’re slower in reaching certain traditional benchmarks such as marriage, having children and career decisions. As a result, homeownership has declined to a nearly 50-year low of 63.4%.
By waiting to purchase, many Boston North Shore homebuyers are paying higher prices for their first homes when compared to their incomes. At slightly over $140,000, today’s first-timers pay more than 2.5 times their annual income. A generation ago, a first home was roughly 1.7 times a borrowers annual income.
Zillow reports that millennials want to buy, but are forced to wait until they have children. And with rental rates continuing to rise, many prospective first-time Boston North Shore homebuyers find it difficult — even impossible — to save enough money for a down payment to qualify for most mortgages. Another factor in waiting to buy seems to be their penchant for job security and stability. Not surprisingly, for a generation that first broke into the labor force during a recession, they recognize the importance of finding, keeping and thriving in a job or profession. As such, the timetable for Boston area homebuyers depends largely on employment stability.
Housing experts say this trend will likely continue, as millennials’ habits remain unchanged as a result of higher rents and the increasing importance of finding and securing their place in the workforce.
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