According to the National Association of Realtors, only a third of home purchases are made by first-time home buyers, which is the lowest it has been since 1987. This figure came from data collected between July of 2013 and June of 2014. Maui real estate has always been dominated by repeat buyers and investors, so it’s not quite as dramatic here as in other places around the nation, but it’s still worth being aware of.
According to NAR Chief Economist Lawrence Yun, there are a variety of factors at play in this situation. Student loan debt and high rents make it harder to save money and make a down payment. Then there is the low inventory of affordable homes, which investors snapped up, along with tight credit conditions and high mortgage insurance premiums. While more jobs are being added to the economy, there hasn’t been a lot of wage growth, although economists predict that will change as the job market improves.
“Less stringent credit standards and mortgage insurance premiums commensurate with current buyer risk profiles are needed to boost first-time buyer participation, especially with interest rates likely rising in upcoming years,” Yun said.
On the plus side, price appreciation has climbed this year, making it easier for homeowners to sell at a good price. Then again, if the number of first-time buyers shrinks, it will be harder for homeowners to sell their homes to upgrade to a more expensive one in the future.
If you’re wondering who comprises the other two-thirds of home buyers, repeat buyers and investors make up the rest. Repeat buyers had a median age of 53 and an income of $95K. They also tend to buy bigger and more expensive homes than first-time buyers, whose median age was 31 with a median income of $68,300. The latter typically purchased a 1,570-square-foot home for $169K.
Whether you’re a first-time Maui home buyer or a repeat buyer, we’re happy to assist you. In this market, it’s important to have expert help from professionals who know the ins and outs of the market in which you are buying. If you need our contact information, you’ll find it at the bottom of the page. Mahalo!