Did you know? In a recent Federal Reserve Survey of Consumer Finances (in 2016), a blockbuster statistic was revealed. The median net worth of homeowners was $231,400. Renters had a net worth of just $5,000. Needless to say, achieving “The American Dream” of home ownership is a critical component of wealth accumulation. Of course, these are uncertain and difficult times for many. In particular, lower wage earners have been hit particularly hard by the pandemic. Oftentimes, these are current renters that may be aspiring to purchase a home someday.
The impact on first-time homebuyers
The median household income was just $63,179 in 2018, according to U.S. Census data. Yet the median home list price was $298,670 in that year—nearly five times more. Furthermore, it keeps going up and up. The median home price has risen to $350,000 in August of this year, according to realtor.com data. That’s a 17% increase in just two years—way higher than the standard 2% to 3% inflation.
With home prices appreciating faster than wage growth, it is easy to see how many would-be home buyers are being priced out. During these times of uncertainty, many people are adhering to tighter budgets due to the uneasiness of the current overall economy. Six months into the global pandemic, many have now adjusted to operate in the current environment. With regards to first-time home buyers entering the market, many have had to delay their plans due to economic reasons.
The silver lining
While the pandemic has wreaked havoc on the U.S. economy, particularly for would be first-time home buyers, there is some good news. Mortgage interest rates are at historic lows & appear to be staying low for some time. Therefore, these extremely low rates greatly assist with buying power. Hence, many first-time home buyers may potentially qualify for a more expensive home today than they would have a year ago.
If you are a first-time home buyer, this may be a great time to take advantage of these historically low rates. Perhaps you have parents or a family member that would like to provide you a financial gift that could provide the bridge needed for a home purchase? It is important to remember that one thing is for sure according to the data: On average, homeowners accumulate substantially more wealth during a lifetime than non-homeowners.
There are various programs available to assist first-time home buyers. At Live South Florida Realty, Inc. we have a network of professionals that will make your home purchase a stress-free process. Call us today & let us help you achieve your dream of home ownership!
