Pandemic Pushed First-Time Homebuyers into Higher-Priced Homes
Washington, DC, February 24, 2021-The Covid-19 pandemic greatly impacted the first-time homebuyer’s path, moving them into a higher-priced rank of homes, reports Forbes.
“If any first-time home buyers were on the fence about taking a more traditional starter home path to homeownership in 2020, the Covid-19 pandemic brought into focus the way they viewed homes and what they really wanted for a dream home.
“For Millennial home buyers, this past year’s change in the economy, employment and especially dropping interest rates offered surprises, with 47% being pleasantly surprised that they could afford a higher-priced home, according to a generational insights report by realtor.com. On the flip side, 21% were surprised that their budget was lower than they thought.
“The dramatic trajectory of mortgage rates in 2020 was a significant positive contributor to housing finance.
“‘For first time buyers, especially, the decline in the 30-year fixed rate from 3.65% in mid-March when the pandemic hit to a record-low of 2.65% on January 7, 2021, has provided unexpected leverage,’ reports Realtor.com, adding: ‘Practically, for many buyers, lower rates allowed them to stretch their budgets and buy more expensive homes than they would have.’
“Generation Y, also known as Millennials, is experiencing a massive wave of people turning 30 in the next few years. The wave started in 2020, with 4.7 million Millennials turning 30, an age when many people consider buying a home.
“This wave continues in 2021, with another 4.8 million members of the Gen Y generation turning 30. The generational progression will peak in 2022, 2023, and 2024 when 4.8 million people will turn 30, each year.
“Considering that in a healthy real estate year, there are about 6 million home sales, it is easy to see what a significant tailwind this demographic wave is projected to have on housing. Millennials are already comprising a dominant share of residential real estate transactions. Within this context, first-time buyers are boosting housing in 2021 and beyond, playing an important role in real estate markets across the country.”