For our EMTAR members, few moments are more satisfying than seeing the looks on the faces of clients who have just closed on purchasing their first-ever home. Whether they are new to our part of Tennessee or have grown up here in the community, the joy expressed by these newbie property owners is a heartwarming sight to behold.

Some statistics indicate that such closings are slightly more rare than they were in recent years, which is a potentially concerning trend. First-time buyers made up 26 percent of all home buyers in 2023, a decrease from 34 percent the previous year, according to NAR.

As for who they are, 70% of Younger Millennials and 46% of Older Millennials were first-time home buyers, more than other age groups, while 21% of Gen Xers were also first-time home buyers.

THE NEXT GENERATION OF BUYERS IS EMERGING

Still, younger adults are emerging as a formidable home-buying demographic—but often they need help to make that happen, according to this recent NAR report.

“Move over, baby boomers: Millennials have emerged as the largest group of home buyers, a significant shift in the real estate demographic landscape,” the report said. “Despite rising home prices and mortgage rates, more young adults are finding ways to emerge in the housing market and purchase their first home. But they’re increasingly turning to family and friends for help with affording a down payment.”

To be sure, first-time home buyers often have limited funds for a down payment and may require assistance in securing financing. They might not have built up substantial equity from a previous home sale. These buyers may be focused on achieving the milestone of homeownership and establishing a stable living situation. They may prioritize finding an affordable property that meets their immediate needs. They may need to spend more time researching the market and seeking guidance from real estate professionals than repeat buyers who are more familiar with the process.

And while both first-time home buyers and repeat home buyers share the goal of acquiring a property, their differing experiences, financial situations, goals, market knowledge, and emotional factors contribute to their unique perspectives and needs during the home buying process.

For instance, first-time buyers may experience more anxiety and uncertainty during the home buying process due to their lack of experience. The decision to purchase a home is a significant financial commitment, and first-time buyers may feel more pressure to make the right choice.

EQUIPPING REALTORS® TO MEET THE CHALLENGE

For those reasons, it’s especially important for REALTORS® to exercise patience and support for clients who are just getting into the mix of home shopping and purchasing. As a helpful tool, NAR has shared A Playbook for Agents Working With First-Time Buyers. “Buying a single-family home for the first time is challenging, but even more so in a time of inventory shortages and affordability issues; help ease anxiety by sharing these useful steps,” the article says. We highly recommend this resource for our EMTAR members.

Of course, a number of helpful tips are available not only for REALTORS® but for first-timer buyers themselves. “Are you a first-time home buyer looking for the top tips and strategies to make sure you get the most bang for your buck?” asks the intro to this 34-minute podcast.

“Broker-associate with RE/MAX Results Janet Judd shares what first-time buyers should know, from reading contracts ahead of time to looking at homes priced under your cap. Then, Executive Vice President at Down Payment Resource Sean Moss explains how down payment assistance programs are changing for the better in today’s market. Plus, Melissa Dittmann Tracey weighs in on if traditional style homes are hot or not. Finally, Laura Adams, host of the Money Girl Podcast, shares tips for saving for your down payment.”

NAR ECONOMIST TO CONGRESS: “FIRST-TIME BUYERS ARE STRUGGLING”

At a Congressional hearing this past spring, NAR deputy chief economist Jessica Lautz testified that “high home prices, elevated mortgage rates and low inventory, which is fueling intense competition, are standing in the way of that first purchase for aspiring homeowners,” according to this report.

The hearing highlighted “NAR research that shows how eroding affordability and inventory challenges are shutting many Americans out of homeownership.”

The insights Lautz shared with the House Financial Services Subcommittee on Housing and Insurance included the following:

• “First-time home buyers continue to struggle to enter the housing market, lacking the housing equity that boosts the purchasing power of repeat buyers.”
  
  
• This buyer segment is slowly dwindling: First-time buyers comprised 32% of the market last year, remaining under the historical norm of 40%, NAR’s research shows. They’re also older: In the 1980s, the typical first-time buyer was in their late-20s; today they’re in their mid-30s. And they’ve needed nearly $25,000 more in household income in just the last year alone to afford higher home prices.
  
  
• From March 2020 to January 2024, existing-home prices have surged by nearly 36% while household incomes have only climbed 23% in that time.
  
  
• Higher mortgage rates have affected buyers who don’t have the benefit of using equity from a previous sale. Compare buyers who purchased a $350,000 home at a 3.5% mortgage rate two years ago to those who paid above 6% in 2024—the latter’s monthly mortgage payment is $680 higher.
  
  
• For those who can still afford a home, they’re facing increased competition: Bidding wars have become more frequent due to the lack of housing inventory. In January, the typical home seller was still fielding about two or three offers, and 16% of homes were selling for over list price. “The housing market continues to have a deficit of inventory compared to demand.”
  
  
• First-time buyers and others are getting shut out of the housing market are being denied an opportunity to build long-term household wealth. NAR research shows the wealth held by an average homeowner is 40 times that of a renter.
  
  
• “Housing wealth can be used to help children attend college, pay for remodeling costs on the home, in retirement or even help their own children achieve the dream of homeownership. Homeownership also comes with a number of social benefits, such as educational achievement, civic participation, health benefits, property maintenance and improvement.”
  
  
• Consumer surveys confirm that Americans still aspire to achieve homeownership. Forty percent of first-time buyers say they still feel now is a good time to buy, and nearly three in four are optimistic about jumping into the market soon, according to TD Bank’s newly released First-Time Homebuyer Pulse. But 62% say they fear overspending on their first home, and affordability is their top concern.
  
  
• A lack of knowledge exists among consumers about down payment assistance programs and loan products with low down payment options. Since 2009, the share of buyers with FHA loans, which have low down payment requirements that help first-timers and low-income buyers, has been cut in half. “Many perspective home buyers may be unaware of low-down payment products that could bring homeownership closer within reach.”

OUR MEMBERS MAKE THE DIFFERENCE

With challenges like these and others, the road to homeownership is a less-than-easy one for first-time buyers. That’s among the many reasons why it’s vitally important for those entering the market to rely on the excellence and expertise of our REALTOR® members who know the landscape, who have the skill set, and who are eager to assist in what will be the first large transaction that many of these buyers will be part of.

After all, there’s nothing like seeing the joy on those first-timers’ faces when the documents are signed and the keys are handed over!

About EMTAR: Chartered in 1969, our Association’s 1,300+ REALTORS® are a proud part of the 36,000+ members of Tennessee REALTORS® and of the 1.5 million+ members of NAR, all working to serve the public and protect the rights of America’s property owners. EMTAR members are known not only for their unmatched real estate excellence and high ethical standards, but also for being generous, hospitable, others-focused, loyal, hardworking, and eager to help wherever and whenever help is needed.