Real estate tip: First-Time Home Buyers, On the Sidelines?

lauren and scottsponsored post by Lauren Hruby and Scott DeVouton

This year has seen continued growth in the Kansas City housing market. Sales of both existing and new homes have gone up.  Home values are up as well.  Buyers are buying, but what’s with first-time home buyers?  As a group, they make up their lowest percentage of buyers since January.

In the hottest of markets, first-time home buyers help fuel the fire.  In fact, first-time buyers helped this season’s market blast off in May. Why have they taken a back seat now?

One reason can resonate with anyone trying to save money.  First-time home buyers may be dealing with higher rent rates, low wages and prior debt.  Coupled with tighter lending requirements, many would-be buyers may be holding back on buying a home, in order to save for the required down payment and home furnishing costs.

In contrast, existing home owners are seeing a return of equity, making it easier to meet down payment requirements.  With access to historically low interest rates, existing home owners are often in a better position to buy their next home.

While most first-time home buyers face a few obstacles in the road to home ownership, there is also the state of inventory in Kansas City. Inventory has been stuck in low gear for a while now, helping push us into a seller’s market.  With prices up and borrowing as it is, first-time home buyers are operating at a competitive disadvantage to home buyers who are also selling homes with equity.

Statistics show, however, that first-time home buyers may have it easier in the months ahead. The Kansas City housing market, like most of the country, typically heats up in the summer months. Driven by families with kids in school, summer break offers a great opportunity to make such a big life change.  Higher demand, coupled with low inventory, have made life harder for first-time home buyers.

As we move into fall, we move out of the busy summer home buying season. Lower demand and pressure on sellers to sell before the holidays should cool home prices a bit.  With the extra few months to save for down payment, we may see more first-time home buyers close sales in the fall.

In the big picture, first-time home buyers could be experiencing the “not-quite-yet” situation that many would-be sellers have seen this year.  Like first-time home buyers, many owners are chipping away at debt, saving money, and getting their feet back on the ground after the Great Recession. This is obviously not a quick process for most people.

As 2015 moves out of summertime, many first-time home buyers will no doubt be in the market.  Whether they remain from the summer crowd or enter for the first time in the fall, the big thing to watch is inventory.  If inventory remains low, first-time home buyers will continue to see the same challenges of higher home prices.  If inventory increases, first-time home buyers could find fall to the perfect time to buy.

First-time home buyers are a unique segment in the housing market.  They represent the next generation of homeowners, and they often stand out as leaders in strong markets.  This summer has seen many buyers sitting on the sidelines for a variety of reasons.  As we move into the fall months, we’ll see how many first-time home buyers decide to enter the game.

Author’s Note – If you enjoy reading our Midtown KC Post articles, and might be buying or selling your own home, please contact us. We enjoy writing these, and love helping people.

Lauren Hruby Real Estate


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