What is holding back potential homeowners from buying? According to the National Association of Realtors 2020 Profile of Home Buyers and Sellers, 47% of potential homebuyers said student loan debt was the biggest obstacle in saving for a downpayment.
In addition, 43% cited high rent/mortgages and 36% cited credit card debt as factors getting in the way of saving for a downpayment.
This year, the number of first-time homebuyers dropped to 31% from 33% last year, the lowest share since 1987 when it was 30%.
Over the course of this year, home prices have continued to tick upward due to low inventory and high demand. NAR said that the median downpayment for all homebuyers this year was 12% — 7% for first-timers and 16% for repeat buyers. Out of first-timers, 26% said they used family for help for the downpayment via gift or loan, which is down from last year when that number was 33%.
Of those who purchased after March – when the pandemic was declared in the U.S. – 15% said they were more likely to purchase a multi-generational home compared to 11% who purchased before. These buyers were also more likely to purchase more expensive homes after March, at $339,400 compared to $270,000 before.
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With pandemic cases spiking again, people are once again working from home and learning from home, pushing homeowners out of their small urban homes and into more spacious homes in the suburbs and even vacation towns. The NAR survey found that 57% who purchased their home after March were more likely to purchase in the suburbs, compared to 50% of pre-pandemic suburb buyers.
Buyers took advantage of virtual and 3D home tours – 5% of buyers after March purchased their homes without physically seeing it compared to 3% who purchased before then. In addition, 97% of buyers searched online, which NAR said is the highest percentage recorded and up from 93% last year.