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The Home Front Decoding the First-Time Homebuyer
Meg Handley / US News & World Report / April 26, 2013
First-time homebuyers are crucial to any housing market, not least because they allow existing homeowners to move out of starter homes and into their next place, keeping the real estate cycle moving.
“First-time homebuyers are a catalyst for the rest of the market,” says Cara Ameer, a Florida-based broker associate and realtor with Coldwell Banker. “They’re really the domino that triggers other buyers–they have a contagion effect.”
But a variety of factors are keeping homeownership out of reach for many would-be homebuyers, including student loan debt – the average 20-something has almost $30,000 of it – and the ability to rustle up enough cash for a down payment.
First-time homebuyers also face stiff competition from investors and all-cash buyers in some markets, especially because the inventory of homes for sale has been so low, as the stream of foreclosures have dried up and many homeowners remain upside down on their mortgages.
“It creates a lot of pressure for first-time homebuyers who are already constrained by a limited price range,” Ameer says. “There are only so many choices, many of which may not be viable or need too much work for their budget or skill.”