1st-time buyers make sacrifices to get a house

March 01, 1992|By James M. Woodard | James M. Woodard,Copley News Service

Today's prospective first-time homebuyers are a determined bunch. They are even more motivated to own a house than were their parents and grandparents.

In many cases, those first-time buyers -- usually between the ages of 18 and 34 -- become two-income families to afford and qualify for a house.

They will sacrifice other pleasures and focus their financial resources on a house. And to raise money for a down payment, they may borrow from relatives or close friends.

Most young families are willing to do whatever is necessary to buy a house. The most actively growing segment of the real estate market in most areas is first-time buyers.

In recent months, declining mortgage interest rates helped to qualify many first-time buyers who would have been priced out ** of the market a year ago.

The median family income for first-time buyers rose 3.2 percent in 1991 -- from $53,100 to $54,800. But house prices for buyers in that group were up more dramatically -- from $106,000 to $118,700. Clearly, lower interest rates were the primary reason.

The figures were compiled by Chicago Title Co. and reported in its recent survey of house buyers.

The report noted that the percentage of Americans between the ages of 18 and 34 has been shrinking during the past decade -- from 31 percent of the population in 1980 to 28 percent in 1991.

But, surprisingly, first-time buyers -- most of whom are in this age group -- increased their market share of house sale activity to 45.1 percent of sales last year.

In fact, the percentage of first-time buyers in the marketplace is now as high as it has been in more than a decade, the report said.

It pointed out that although first-time buyers tend to respond to lower interest rates even during a recession, repeat buyers do not.

Even in areas where housing costs are far above the national average, first-time buyers are the bright segment of the real estate market.

In one California coastal community where the median price for a house is $233,000, the most active segment of the sales market is first-time buyers, the report said.

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