There was a time when younger families having average incomes shopped for their first house. This purchase, colloquially known as a “starter home” would invariably be smaller and located in any affordable neighborhood. It is not a place where the buyer would eventually want to grow roots in.
Change in buying behavior
Nowadays, first time buyers of homes are purchasing bigger homes in a place where they ultimately want to settle down. This behaviour in property buying leads to the fundamental change in housing for families. However, experts say that there exist some families who cannot afford to buy more expensive properties.
The fact is that first time buyers are not buying strater homes anymore. According to Issi Romem, chief economist of BuildZoom, an online marketplace for real estate construction, the new owners are now part of “financially select group”. He said that not everybody who could become a home buyer for the first time can afford to be now.
Analysis of data extracted from the American Housing Survey by the Census Bureau show that stagnant wages and rising home buyers tilt the buyer population towards the higher earners. Constricted housing inventory also plays an important part. The facts say it all: first time buyers in 2013 bought homes having an average area of 1,845 square feet. To illustrate, the median home size in the US is only 1,819 square feet. It follows that homebuyers who once would have considered purchasing the lowest price homes even 10 years before will be unable to buy now. Those who can purchase a house will go for an upmarket property.
Not like old times
First time buyers are also exhibiting different behavior after buying the property. Unlike older times, they are not purchasing a starter home and then plan to upgrade theirt accomodation in five years. Instead, they buy a house and stay there. A survey conducted by National Association of Realtors has confirmed this behavior. The minimum stay period now has risen up to ten years.
A Bank of America commissioned survey also confirmed the study. The early 2016 study led to the finding that about 75 percent of the first time buyers will prefer to skip starter home stage. Instead they will locate a house which meets their future and present requirement. Approximately 35 percent of the surveyed population said that they fully intend to retire in their first bought home.