The number of people buying their first home has reached its highest in 13 years, real estate website Zillow reported Wednesday.
The company’s 2023 Consumer Housing Trends Report indicates that first-time home buyers now make up 50% of all homebuyers, up 45% from 2022 and 37% from 2021. This is the largest share since about 2010, Zillow reports, when this group had an incentive in a FTHB tax credit.
"High mortgage rates and a shortage of inventory is keeping would-be repeat buyers in their current homes," Zillow senior population scientist Manny Garcia said. "A greater relative share of first-time buyers is filling the gap, and they're competing against each other for the limited number of affordable starter homes on the market."
It now takes an average of 12 years for a typical FTHB to save up for a down payment, compared to nine years pre-pandemic. At the same time, the average monthly mortgage payment has more than doubled.
The vast majority of existing mortgagees have locked in a rate below 5% and are almost half as likely to consider a move in the current market, which is plagued by low inventory, rising home prices and interest rates surpassing 7%.
The growing share of FTHB suggests this group is finding creative ways to make home ownership work for them, despite the ongoing challenge of affordability.
Nearly half of FTHB are millennials (49%) - adults ages 29 to 43, while Gen-Z buyers ages 18 to 28 comprise 27% of all FTHB.
Today’s FTHB are more aggressive in their approach than repeat buyers, as reports show they are more likely to contact a minimum of three real estate agents and three mortgage lenders.
They're also more likely to make at least two offers in their home ownership quest while being denied a mortgage at least once before ultimately reaching loan approval.
Zillow's report finds that most FTHB (60%) are harnessing at least two finance sources for their down payment - the top two being personal savings and gifts from loved ones.
